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  • Writer's pictureSamantha Diggs

Should You Consolidate Retirement Accounts? Why the Answer is Yes.

If you've switched jobs throughout your career, it's likely that you have more than one retirement account. While this may not seem like a big deal, having multiple accounts can lead to confusion and difficulty when it comes to managing them in a way that will lead to financial security down the road. So, if you’re wondering if you should consolidate retirement accounts, the simple answer is yes. Let's discuss the benefits of consolidating retirement accounts and how the process works.

Benefits of Consolidating Retirement Accounts

Simplify Management

Consolidating retirement accounts can simplify the management of your retirement savings. With multiple accounts, you may have to keep track of different account balances, investment options, and fees. By consolidating accounts, you have a clearer picture of your retirement savings and make more informed investment decisions.

Reduce Fees

Having multiple retirement accounts means paying multiple account fees. By consolidating your accounts, you may reduce the amount of fees you pay and save money in the long run.

Avoid Costly RMD Penalties

Once you turn 73, you are required to take minimum distributions from your retirement accounts each year. Having multiple accounts can make it difficult to calculate and manage these distributions, which can lead to costly penalties from the IRS. Consolidating retirement accounts allows you to simplify the process and avoid this risk.

How to Consolidate Retirement Accounts

Consolidating your accounts is a relatively simple process with the assistance of RPCSI and your financial advisor. First, you’ll want to review your existing retirement plans and determine which ones can be consolidated. Not all plans can be rolled over into a new plan. Generally, 401(k)s, 403(b)s, profit-sharing plans, and other employer-sponsored plans may be rolled into another qualified plan without paying taxes or penalties as long as the plan accepts rollover funds. However, SEP, SIMPLE, and Traditional IRAs can only be consolidated into a qualified retirement account if your employer allows rollovers of these specific types of accounts.

Once you’ve determined if the plans you wish to consolidate are compatible, reach out to our experts at RPCSI. We’ll review your information and provide you with guidance on who to contact and what steps you will need to take to consolidate your retirement accounts. Once the consolidation is complete, review the new plan documents to confirm that you are satisfied with the changes made.

Consolidate Your Retirement Accounts with RPCSI

Consolidating retirement accounts is an important step in managing your retirement savings. If you have multiple retirement accounts you wish to consolidate, our certified third-party administrators are ready to help guide you to successfully complete the transition process.

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