We use cookies to make wikiHow great. There’s not a whole lot to discuss when it comes to retirement accounts, since they are legally established by and for individuals only, and not couples. If you have a few different accounts from the first seven items in the list, those can be combined into one IRA account. Most of the legwork will go into deciding which accounts you can combine. Account minimums and fund minimums. Remember to hold onto copies of all forms before you submit them. You have a few options when it comes to those accounts: Leave them where they are. IRAs generally offer more investment options than employer-sponsored 401(k) plans. Find your plan description. If you have most of your funds invested in bonds in account A, you can’t compare it to account B, which is heavily invested in equities. Thanks to all authors for creating a page that has been read 4,674 times. Direct transfer. Performance over time. To be honest, I also had no idea what they meant until recently. If you're like most people, you may have left them there simply because you weren't quite sure what to do … This article was co-authored by Jonathan DeYoe, CPWA®, AIF®. You may have accumulated several retirement accounts in different places over the years, including 401 (k) plans from previous employers. For example, you will have fewer accounts to take required minimum distributions from once you reach age 70½, and having fewer accounts should mean you're paying less in management fees overall. If you wait too long, you generally must pay taxes on the amount and may also pay a 10% early withdrawal penalty. Whether there is an account minimum. Having one account gives you more flexibility and options. Ideally, they should be as low as possible. Identify the account that will receive the transfers. This is called an IRA rollover. Indirect rollover. He studied Financial Analysis at the CFA Institute and earned his Certified Private Wealth Advisor (CPWA®) designation from The Investments & Wealth Institute. These plans, typically called 403(b) plans, can be rolled over into a traditional IRA, Roth IRA, and qualified plans, such as a 401(k). If you are wondering whether to combine your 401 (k) accounts, here are a few of your options: 1. While you are still working for a company that has a retirement account you (and hopefully the company, through an employer match) are contributing to, you can not move that retirement account anywhere else. You want to continue to contribute to the account. Diversity of mutual funds without transaction fees. You can consolidate retirement accounts by transferring money from multiple accounts into one established IRA account (or into a new IRA you open). If you think your income will be higher in retirement than it is presently, contributing to a Roth IRA is preferable to contributing to a traditional IRA. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. If you are confused by what the acronyms - LIRA, LRSP, LIF, LRIF, RLIF, PRIF, and their many other combinations mean, you are not alone. Try intermittent fasting instead. Even if you own 10 of them, the IRS views all 10 as one account. Easier to … If your pension plan, number eight in the list, offers you the ability to take a lump sum distribution, that entire amount can usually be rolled over into your IRA. With over 25 years of financial advising experience, Jonathan is a speaker and the best-selling author of "Mindful Money: Simple Practices for Reaching Your Financial Goals and Increasing Your Happiness Dividend." Once you leave the second job, that 401(k) gets rolled over into its own IRA, and no… You can roll stock into an IRA but you’ll lose tax advantages. Investment options. Keep the 401 (k) with your old employer. Expert Interview. Consolidating 401 (k)s and other retirement accounts can simplify your overall financial situation. A2. Some providers will require a minimum amount before they’ll open an account. You can’t with a 401(k). You'll also need to decide whether you want an advisor or if you want to do it on your own. With a traditional IRA, your contributions are tax deductible and you pay taxes at ordinary income tax rates when you get distributions. If you carry out a second IRA rollover before 12 months have passed, the IRS requires you to include as gross income on your tax return any previously untaxed amounts distributed from an IRA. What you absolutely positively should not … For the most part, you can combine them, though certain restrictions apply. Once you are a certain age, retirement accounts require a minimum distribution. You could roll over the pre-tax amounts to a traditional IRA or another employer-sponsored retirement plan if you want to continue the tax-deferred growth potential of the pre-tax assets. Fees. Last Updated: November 19, 2020 However, withdrawing any earnings will incur taxes and a possibly a penalty. The same rule does not apply to a 401(k) account. Look for a financial planner with the Certified Financial Planner designation. Investing involves risk including the possible loss of principal. There are also tax implications involved whenever you are dealing with retirement benefits. And combining at least some them is a good way to simplify your retirement planning. {"smallUrl":"https:\/\/www.wikihow.com\/images\/thumb\/3\/36\/Consolidate-Your-Retirement-Accounts-Step-1.jpg\/v4-460px-Consolidate-Your-Retirement-Accounts-Step-1.jpg","bigUrl":"\/images\/thumb\/3\/36\/Consolidate-Your-Retirement-Accounts-Step-1.jpg\/aid8628722-v4-728px-Consolidate-Your-Retirement-Accounts-Step-1.jpg","smallWidth":460,"smallHeight":345,"bigWidth":728,"bigHeight":546,"licensing":"