Retirement Planning Tip: Consolidate Your IRA Accounts

I once had a client come in who had 16 different IRA accounts going-All at different financial institutions. As you can imagine, the institutions were ecstatic to collect all those fees but the guy was getting killed by the fees and poor performance.

Tip #7 for Retirement Catch-Up is Check Up On Your IRAs and Consider Consolidating Them.

There is one downside to consolidating your retirement accounts-most institutions will charge you a termination fee. Ask every institution what their policy is and all costs associated with terminating the accounts. Depending on the size of your account I have seen the receiving institution eat the fees. With all the choices available today it’s hard for me to see the logic in having multiple custodians for your retirement accounts.

3 Responses to “Retirement Planning Tip: Consolidate Your IRA Accounts”

  1. Tiredbuthappy says:

    Now, if only it were so easy to consolidate workplace retirement accounts. I have four, soon to be five, and rules at past employers are preventing me from consolidating.

  2. Steve Mertz says:

    Really-tell me more please

  3. Tiredbuthappy says:

    I’m happy to elaborate. I think my situation is unusual, at least from people I’ve talked to. Like the typical Gen Xer, I’ve changed jobs a lot, so I have a lot of accounts. This year, I tried to consolidate them and failed miserably.

    1. Former employer has rules that prevent you from rolling over your TIAA-CREF 403b account to an IRA, or even to another 403b account, unless your account balance is under 5K or unless you are 59 1/2. Great. In twenty years I’ll be old enough to do it. I think they have the rule so that you don’t blow your nest egg. I think this rule is insultingly paternalistic. I don’t want to spend the money. I want to put it in an IRA that has more fund options. But I’m sure some people would spend the money, and this rule means they’ll actually be able to retire, so I shouldn’t grumble too much.

    2. Another former employer allows rollovers, but when I tried to roll my TIAA-CREF 403b into my current 403b account, they messed up and sent a check to my current employer’s HR office instead of just transferring the funds. It’s been over 3 months and I’m still spending quality time on the phone with customer service trying to get them to stop payment on the check and just put the money back in my account! It’s only $800. I’m sorely tempted just to pay the 10% penalty and cash the check and put the $$ in my Roth IRA just to end the problem.

    3. Currently I work for two companies, both with 403b accounts. One allows rollovers to an IRA, another 403b account, etc. The other does not allow you to roll over to an IRA, but they will allow you to roll over to another 403b or 401k if you change employers.

    So, at the age of 29, I have no less than FOUR 403b accounts. (And one Roth IRA, but I control that). I’m planning to change jobs this year, so I’ll be able to add another account to my collection.

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