How to Consolidate IRA Accounts
Nearing retirement, everyone begins to look closely at their funds. If you have IRA's, 401-k's and pension plans scattered all over, you may consider consolidating your accounts, if for no other reason than to save on annual fees. You cannot move a 401-k out of an employer account if you're not yet retired and still work there, but you can consolidate all other IRA accounts.
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Things You'll Need
- The most recent statement for all IRAs
- Transfer paperwork for pension and 401-k's
Instructions
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List all IRA's that you hold. You also want to list any pension plans that can be removed as a lump sum and 401-k's from past employers.
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Write down all contact information necessary and send for any transfer forms that are needed. Some employer plans have on-line forms available. Make certain that you have the most recent statement for all IRA's, pension plans and 401-k's.
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Check with a local broker to open an account if you wish to have various asset classes (stocks, bonds, and fixed income). If your assets are held in an IRA with banks, brokerages and mutual fund companies, find a company that has both brokerage and banking services. You may also use online services.
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Complete transfer forms. If you have assets that are in brokerage houses, the entire asset does not have to be cashed in, but can be transferred as it is. It is much like taking a shoe from one box and merely placing it in another. The shoe is still the same.
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Understand that there are fees from the releasing company. The fees vary but the average is usually around $100 to do the transfer.
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Realize that annuities may or may not be allowed in the brokerage account. If they are not allowed, speak to your broker about become the agent of record. This means that it doesn't have to be cashed out, but the broker can have access to the management of the account.
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Open an IRA money market account to accumulate banking style products as they come due. Once enough money is available for CD minimums you can purchase one. Do not cash out a CD until it is due, but transfer them as they come. Make certain that the paper work is at the surrendering bank in plenty of time and the request specifies that it is to be cashed out at maturity.
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Tips & Warnings
The broker can help with company held retirement funds but it must be done on the company paperwork.
All IRA's, including 401-k's and pensions that are no longer held at the company, need a statement that is not more than 90 days old, in order to be transferred.
Unless the security is incredibly poor performing, or you choose to consolidate to one or two mutual fund families, transferring in-kind is usually the best method.
Never cash in a CD if there is a penalty. Keep it on the list, with the date due and wait for it to mature. For those CD's have maturity dates in the distant future, unless the rate is exceptional, use them as your RMD if that option is available.
Remember that Roth IRA's and Traditional IRA's have to remain in separate accounts. You can house both accounts with the same company, in two different accounts.
