With workers changing jobs an average of 12 times during their career, chances are you’ll set up multiple types and varieties of retirement accounts over the course of your lifetime (please don’t cash them out!). But instead of maintaining a lot of separate accounts at different employers, you can in many cases consolidate, or merge, your various retirement plan accounts into just one easier-to-manage account.
Why Consolidate Your Retirement Plans?
Consolidating your retirement plans can be a benefit with:
- Paperwork: Keeping up with one account with one firm means you’ll get only one statement every month and one annual statement at the end of each year.
- Convenience: Maintaining just one account means you’ll deal with only one firm for customer service issues.
- Investment management: It’s much easier to maintain your preferred asset allocation.
- Annual fees: Consolidating your various accounts into one account can reduce or eliminate annual maintenance fees. Many brokerages charge an annual fee for accounts with less than $5,000. If you have two accounts with $4,000 in each, you’re possibly paying fees that you don’t have to pay!
Which Retirement Plans Can Be Consolidated?
The table below indicates which types of retirement plans can be consolidated into which other types. Note that not all types can be consolidated: for instance, you can consolidate a Roth IRA into another Roth IRA, or into a Roth 401(k), Roth 457(b), or Roth 403(b), but not into a Traditional IRA. Regardless of which type of consolidation you’d like to do, it’s a good idea to consult a tax advisor and/or a financial planner for guidance.
Consolidate your retirement accounts into a Scottrade No Fee IRA Today! I did!
