Consolidating Retirement Accounts Can Pay Off – In Many Ways

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Now that fall is officially here, change is everywhere.

The days are shorter and cooler and, in many places, the trees are bursting with color.

In preparation for the long winter, squirrels gather nuts and put many of them together in one place.

If you’re nearing retirement, you might be able to learn something from our furry friends, as you, too, may want to consolidate some of your assets — in particular, your retirement accounts as you prepare for a new season in your life.

You might be surprised at the number of retirement accounts you’ve accumulated over time.

For example, you may have 401(k) plans with a few employers, along with IRAs that you’ve established with different financial services companies.

If you were to consolidate all these accounts with just one provider, you might find several key advantages.

Possibly the biggest benefit of consolidating your accounts is that it may make it easier for you to track and manage your retirement assets.

Once you retire, you could choose to do any number of things: travel the world, pursue your hobbies, volunteer or even open a small business or do some consulting.

But whichever retirement lifestyle you choose to follow, you will need to know how much you can afford to withdraw each year, how you can stay ahead of inflation and how best to control your investment-related taxes.

You may find it easier to accomplish these things if you have a single, unified investment strategy — and it may be easier to develop such a strategy if you have all your retirement accounts at one place, possibly under the guidance of a single financial advisor.

You’ll also find some other benefits to consolidating your retirement accounts:

• Less fees — You may be paying fees to several different providers for maintaining your retirement accounts.

You might be able to reduce these fees by consolidating your accounts with one provider.

• Less trouble calculating distributions — Once you reach 70 1/2, you’ll need to take withdrawals, or distributions, from your 401(k) and your traditional IRA. (This requirement does not apply to a Roth IRA.)

It’s not that hard to calculate these required minimum distributions from a single IRA or a single 401(k), but if you have a mix of these accounts at different places, you might have to do a lot of number crunching.

If all your accounts were held at the same place, you may have an easier time.

• Less chance of forgetting assets — You may find it hard to believe, but plenty of people lose track of their 401(k)s, IRAs and other retirement accounts.

In fact, the National Registry of Unclaimed Retirement Benefits lists more than 50,000 individuals who are owed benefits from 401(k)s, profit-sharing plans or IRAs and either can’t be reached or don’t respond to inquiries.

But if you hold all your retirement accounts in one place, you may be less likely to misplace them than if you kept them in several different financial institutions.

Just as summer turns to autumn and autumn turns to winter, the seasons of your life follow one another in seemingly rapid succession.

So when you enter your retirement season, make sure you’re prepared — and one way to help that preparation is to consider consolidating your retirement accounts.

Scott Flake is a licensed financial advisor with the firm of Edward Jones. He hosts regular investment discussions. For more information, call his office at (928) 468-1470.

This article was written by Edward Jones for use by your local Edward Jones financial advisor.

Edward Jones and its financial advisors are not tax advisors. Please consult with your qualified professional regarding your particular situation.

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