Consolidating Accounts

Consolidating Accounts — When it comes to retirement accounts, one is the easiest number


Consolidating Accounts — When it comes to retirement accounts, one is the easiest number

According to the Bureau of Labor Statistics, American workers may hold an average of 11 jobs between the ages of 18 and 44. That’s a lot of extra retirement accounts to track if you leave one at each employer.

Keeping it together

One solution is to consolidate multiple retirement accounts by rolling over the balances into a single Individual Retirement Account (IRA). In addition to maintaining the potential for tax-deferred earnings growth, consolidating accounts into a rollover IRA offers two advantages:

  • Investment choice Employer plans like 401(k)s offer a limited investment menu. A rollover IRA gives you access to virtually the entire investment universe. This may make it easier to build a diversified portfolio matched to your needs.
  • Easy account management — Instead of having to compare figures from several account statements with different formats, your investments are all shown on a single statement. You can see at a glance how your retirement strategy is doing. As a bonus, account fees may be lower than in an employer plan.

Retirement investing is challenging enough. Keep it simpler by keeping it together.

Take your savings to your next job

When you move to a new job, you may be able to roll over your previous employer plan account balance into your new employer’s plan. This type of rollover, sometimes called a roll in, keeps your retirement savings at your current workplace. The big advantage is you can continue to make payroll contributions into your new plan and you don’t have to start from zero building an account balance. You may also have access to employer matching contributions, which can help your savings grow quicker.

Plan your income sources

As you near retirement, you’ll want to figure out where your retirement income will come from. It may be easier to plan income sources with a consolidated retirement account that gives you a big picture view. Further down the road in retirement, when you reach age 70½, you will need to calculate required minimum distributions (RMDs) from all of your retirement accounts. Consolidating into one account makes the RMD calculation much easier.

Get a complete picture

Consolidating retirement accounts makes it easier to keep an eye on your asset allocation because all of your investments are in one account. Retirement investing is challenging enough. Keep it simpler by keeping it together.1

1 Before transferring assets, carefully consider the features of both the existing and the new product for differences in costs, surrender charges and other important aspects. There may also be tax consequences associated with the transfer of assets. Consult with your own advisors regarding your particular situation.