Five Reasons Why You Need to Consolidate Your IRAs - Rodgers & Associates
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Five Reasons Why You Need to Consolidate Your IRAs

If you have ever shopped around for bank CD rates, you may have found yourself opening an IRA each year at a different bank. Or perhaps you found a great new job and left your 401k with your previous employer. Maybe you even started a new IRA when you changed financial advisors and haven’t touched your old IRA since.

No matter how you got them, you may find yourself with a collection of IRAs scattered around. What’s worse is that they probably have no overall strategy and are not connected to each other.

Did you know you will reach a point in retirement when you will be required to take money from each of them?

There is a way to simplify that process and cut down on the record keeping. You should consol­idate all of your IRAs into a single account. This includes that old 401(k) which you can probably rollover to an IRA with a 5‑minute phone call to the investment provider and by completing a form.

The benefits of consol­i­dating your IRAs include:

  1. Less Record Keeping – You will get fewer monthly state­ments, fewer emails and not as many forms at tax time.
  2. Coordi­nated Invest­ments – Making sure you have a well-diversified portfolio can’t be done when you have several IRA accounts held in different places.
  3. Reduce Expenses – Many IRAs charge annual fees. Consol­i­dating the IRAs will reduce the amount of fees you are paying.
  4. Simpler Estate Admin­is­tration – If you have ever settled someone’s estate, you know all about this. More accounts equal more work and more complexity! Make it easy on your kids and/or your executor.
  5. Easy Required Minimum Distri­b­u­tions (RMDs) – At age 70.5 when RMDs start, you’ll have multiple IRA custo­dians after you each year. If the IRAs are consol­i­dated, it’s just one calcu­lation. Also, if you need to figure income tax withholding, the amounts are based on just one account.

Just as important as any other spring cleaning, clean up your finances this year! Make a plan to get those IRAs in one place.