Consolidating multiple 401k accounts

26-Sep-2016 06:02

One of the best ways to increase your investment returns is to focus on finding ways to reduce the investment fees you pay and consolidating accounts helps.Once you reach age 70 1/2 there is an IRS formula you must follow that determines a minimum amount you must take out of your retirement account each year. If you have multiple accounts, each financial firm will send you paperwork each year and notify you of your required minimum distribution. And if you miss a required distribution there is a penalty.You can consolidate retirement accounts by transferring money from multiple accounts into one established IRA account (or into a new IRA you open). Here are seven reasons to consolidate your IRAs and other retirement accounts.Once you retire you'll need to figure out how to structure your investments so you get a monthly (or bi-weekly) "paycheck" from your account.

It is not a difficult process but if you are not an investment advisor who is armed with the right questions and knows which forms are needed, it can be a bit daunting and frustrating.

Having money in multiple accounts with different funds does not necessarily make your portfolio more diversified.

In fact, it may make it harder to see your holdings, and may actually conceal very similar investments in various accounts.

It is not uncommon to have multiple 401(k) accounts after switching jobs several times over a career.

According to a Fidelity survey, almost a third of people who transitioned jobs were not sure what to do with their old 401(k) or 403(b).

It is not a difficult process but if you are not an investment advisor who is armed with the right questions and knows which forms are needed, it can be a bit daunting and frustrating.

Having money in multiple accounts with different funds does not necessarily make your portfolio more diversified.

In fact, it may make it harder to see your holdings, and may actually conceal very similar investments in various accounts.

It is not uncommon to have multiple 401(k) accounts after switching jobs several times over a career.

According to a Fidelity survey, almost a third of people who transitioned jobs were not sure what to do with their old 401(k) or 403(b).

Unfortunately, with lack of time and training, many Americans have neglected their retirement accounts.