If you are a typical investor, you likely have three or four different retirement accounts. It is not unusual for someone who is making his or her annual contribution to open a new IRA each year with a different custodian. For example, someone may open a Fidelity IRA one year and a Merrill Lynch the next, just to invest in a mutual fund available through that particular family of funds.
It is also very common for an individual to allow his or her retirement funds to remain in the employer plan, such as a 401(k), 403(b), or the pension plan, after he or she leaves the company. Many people do not realize that these funds can be rolled over to an existing IRA. Since company plans typically offer only a limited number of investment options, by rolling over you can increase your investment selection while reducing the number of accounts.
All deductible and non-deductible traditional IRAs can be combined. The exception is a Roth IRA. You cannot consolidate funds from a Roth IRA with a traditional IRA. These accounts must remain separate.
Why consolidate? Having multiple retirement accounts may cause you to have duplication in your portfolio where you may have similar investments with similar objectives. Consolidating your retirement accounts into a single account makes it easier to manage your asset allocation… Continue Reading
