Account Consolidation: 3 Tips to Streamline Your Retirement Savings
Estimated reading time: 2 minutes, 37 seconds
Millions of individuals have multiple nest eggs for retirement, and many have held quite a few jobs in their lifetime. Merging multiple accounts can have several financial benefits. Do you want to streamline your retirement savings with account consolidation? Here are a few reasons why consolidating your retirement accounts may be a great option for you.
1. You can simplify portfolio management.
When it comes to rebalancing your portfolio or preparing for those mandatory account withdrawals, merging multiple retirement accounts can make tasks like these much simpler. This way, you don’t have to keep track of as much paperwork because all of your assets are included in the same investment summary.
2. You can potentially reduce what you’re paying in fees.
Combining multiple retirement accounts can potentially reduce the amount you are paying in account maintenance fees. As a result, this could eliminate additional costs that could save you hundreds of dollars annually. For instance, if you no longer work for a company and you previously received a 401(k) match from the employer but you no longer receive that benefit, consider transferring that money to an IRA or another 401(k) to eliminate costly account fees.
3. It’s easier to manage mandatory withdrawals or (RMDs).
If you have fewer retirement accounts, it’s much easier to manage those required minimum distributions. Don’t hesitate to reach out to a financial advisor to develop the best withdrawal strategy for you. Failure to take the required distribution annually results in a 50% penalty on the extra you should have withdrawn.
Due to the CARES Act that passed in late March 2020 in response to COVID-19, gives taxpayers the option to NOT take an RMD in 2020. In addition, it’s important to be aware of the SECURE Act provisions as the age for required minimum distributions has increased from 70 ½ to 72.
How to Consolidate Retirement Accounts
On Your Own
- If you prefer to manage the process yourself, you can typically roll over retirement accounts online. In addition, you can also contact your custodian over the phone for further assistance.
With a Financial Advisor
- If you prefer to work with a financial professional, the advisor usually handles a lot of the legwork on your behalf. Advisors typically assist in completing the necessary paperwork to move your accounts and provide information regarding the tax impact of consolidating retirement accounts.
Note that Kingdom Trust does not provide investment advice nor do we offer any type of tax or legal advice. We are a neutral third party to any type of investment decision or opportunity.
We strongly recommend you make any investment decisions with the help of a financial team that includes, but may not be limited to, an accountant, a lawyer, a financial planner and any other professional who specializes in the type of asset in which you are considering investing.
Rollovers of Retirement Plan and Distributions | IRS.gov
Publication 590-B (2019), Distributions from Individual Retirement Arrangements (IRAs)
Rollovers and Transfers: 3 Ways to Move Retirement Assets to a New Account
Do You Know the Differences Between Transfers, Rollovers and Contributions?