If you have a 401k from a previous employer or you have multiple IRAs, you know how frustrating and complicated it is to stay on top of things, right? You get statements from this company, that company and over there. Depending on how well the economy is doing or how you feel that day, you may only open the first statement and toss the rest away in the drawers. 

Surprisingly, many people are not aware that they can “consolidate” all their IRAs and 401k into a single IRA. To do this, you would simply rollover your 401k and all your IRAs into one account.  

The benefits of consolidating your 401ks and IRAs are even more valuable if you’re already retired and are currently or will be taking Required Minimum Distributions (RMD) soon.  

If you think it’s hard enough to understand all those statements, think about how complicated it is to keep track of all those IRAs and 401ks, and calculate much you have to take out for RMD each and every year.

For example, if the RMD was $2,000 and nothing was distributed, your penalty would be $1,000. 

Ouch!

Furthermore if you have already been taking distributions before you turn 70½, don’t make the common mistake of assuming that you have taken the required minimum. You may need to increase the distribution or face a penalty.

In fact, you may even be saving money by doing so because some existing 401k plans and IRA accounts have high internal expenses.

So, what could be the real benefits of consolidating all your 401k and IRAs? Here are ten reasons to consolidate them.

1.  One Statement. When all your investments appear on one statement, it may be easier to determine whether your investment choices still meet your needs or if you need to make changes.

2.     Know What’s Working and What’s Not. If certain investment choices are not working, it may be easier to spot them when all your retirement assets are consolidated in one account.

3.  Simplify Account Management. With only one account, there’s only one company to deal with and one statement to view.

4.  Annual Reviews. When your retirement assets are in one account, it’s easier to see how things have done in the past year and how to proceed next year.

5.  Reduce Fees. You may be paying more than you think to maintain multiple IRAs and 401ks. A consolidated account may reduce your fees and save you money.

6.  One  Required Minimum Distribution (RMD.) When you are 70 ¹⁄2, you’ll be required to take RMDs from your IRAs. That calculation can be complicated when you have multiple accounts scattered at different institutions. With one IRA, the calculation is easier—and withdrawals are simpler.

7.  Avoid Stiff Tax Penalties. With one account, taking RMD will be easier and you won’t have to worry about missing RMDs and stiff penalties.

8.   You’re in Control. With one account, control is just a cinch.

9.   Benefit Your Beneficiaries.     Estate planning may be easier for your beneficiaries. With an IRA, your beneficiaries may enjoy the benefits of stretching the income for many years and reduce taxes.

10.  No More Headaches.  With a single account, you reduce the number of statements and 1099s you receive during tax time.

To find out more about the benefits of consolidating your 401k and IRAs, click here or call us (810) 714-9021.