Should you consolidate retirement accounts?

Long version

One of the rewards for working over several decades is the ability to contribute to tax-advantaged retirement accounts, which can help provide needed income for you when you do retire. As the years went by, you may well have accumulated several retirement accounts, such as IRAs and 401(k)s or similar employer-sponsored plans. But you might find it advantageous to consolidate these accounts with a single provider.

Consolidating them can provide you with several potential benefits, including these:

  • Less confusion and clutter – If you have multiple accounts in different locations, it may be difficult to keep track of tax documents, statements, fees, disclosures and other important information. Consolidating accounts could help provide clear, simplified account maintenance.
  • Less likelihood of “lost accounts” – It may be hard to believe, but many people abandon their retirement accounts, leaving thousands of dollars behind and unclaimed. It’s possible that employers can even move small, old accounts out of their 401(k) plans and into an IRA on behalf of their former employees, thus increasing the chances that savers will lose track of their money. By consolidating your retirement plans with one provider, you can ensure you don’t lose track of your hard-earned money.
  • Ability to follow a unified strategy – With multiple retirement accounts, and different investment portfolios, you might find it difficult to maintain a unified financial strategy that’s appropriate for your goals and risk tolerance. But once you’ve consolidated accounts with a single provider, you’ll find it easier to manage your investment mix and to rebalance your portfolio as needed. The need to rebalance may become more important as you near retirement because you may want to shift some of your assets into investments that aren’t as susceptible to swings in the financial markets.
  • Possible improvement in investment options – Often, 401(k)s may have limited investment selection, so consolidating accounts with a full-service firm may allow for a wider array of products and strategies. This broader exposure can potentially help you improve your overall retirement income strategies.  
  • Greater ease in calculating RMDs – Once you turn 73, you will need to start taking withdrawals — called required minimum distributions, or RMDs — from your traditional IRA and your 401(k) or similar plan. If you don’t take out at least the minimal amount, which is based on your age and account balance, you could face a penalty. If you have several accounts, with different providers, it could be cumbersome and difficult to calculate your RMDs — it will be much easier with all accounts under one roof.

So, if you do have multiple retirement accounts, give some thought to consolidating them. The consolidation process is not difficult, and the end result may save you time and hassles, while also helping you manage your retirement income more effectively.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.
Edward Jones, Member SIPC

Number of words: 475

Short /radio version

PSA: Should you consolidate retirement accounts?

TBA: Oct. 17, 2022

If you’ve been working for many years, you may have accumulated several retirement accounts, such as IRAs and 401(k)s. But you might find it advantageous to consolidate these accounts with a single provider.

Having all your accounts in one place may help reduce the confusion and clutter involved with keeping track of tax documents, statements, fees, disclosures and other important information across multiple accounts.

And by consolidating accounts, you’ll avoid the possibility of forgetting about an old retirement plan. It’s surprising, but many people do indeed abandon accounts.

Also, when you place all your retirement accounts with one provider, you’ll find it easier to maintain a unified investment strategy and to rebalance your portfolio as needed. And it’s possible a new provider may even offer some new investment options.

Finally, when you reach 73 and start taking required withdrawals from your 401(k) and traditional IRA, you’ll find it easier to calculate the right amounts when you’ve consolidated all your accounts.

So, if you do have multiple retirement accounts, give some thought to consolidating them. It may save you time and hassles while also helping you manage your retirement income more effectively.

This content was provided by Edward Jones for use by (FA’s NAME), your Edward Jones financial advisor at (Branch address or phone #).

Member SIPC 

Number of words: 191 (excluding FA’s name, address/phone number)