What Are Some Tips on Consolidating IRAs?

Answer...

Do you have more IRAs then you know what to do with? Is the paperwork making you crazy? Then maybe it's time to think about consolidating all of those IRA accounts. 

Why do people end up with a lot of different IRA accounts?
Years ago, people would set up their IRAs with banks. They would set up an account one year, then set up a new account the next year, and so on. Before you know it, they would end up with numerous accounts at different banks. Today, mutual funds and brokerage firms are also selling IRAs, so there are even more choices. And each year, people are shopping for the best rate and setting up a new IRA account. Before you know it, they have 10-plus IRA accounts.

Why don't they just add money into the IRA account they already have?
Many people think they need a new IRA account each year. Plus they like to shop around for the best rates.

Should investors consolidate their IRAs? What are the benefits?
Yes. The benefits are:
     - You will have a better view of your investment program.
     - You can move dollars around more efficiently.
     - It reduces the amount of paperwork.
     - It can save you dollars if your IRA accounts charge fees.
     - When you start taking out your minimum distributions, you will have a
       better sense of what you have - and what you need.

When I do consolidate, what should I be careful of?
Make sure you keep your Roth IRA separate from your regular IRAs, and your SEP IRAs separate from your other accounts. You  have to be really careful of this.

by Diahann W. Lassus, CFP^®, CPA

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