Should I put all my retirement accounts with one brokerage/financial firm?
I have two accounts at one firm out of town, and a recently inherited account with another firm here in my hometown. My daughter will inherit it all, but she lives 10 hours away in another state with a family and responsibilities of her own.
Job jumping is particularly an issue for college-educated people born in the latter years of the Baby Boom (1957-1964).
Some people have retirement funds in too many accounts. tax code, which has offered savings incentives for accounts with different qualifications and characteristics through the years.
In part, this is a function of a mobile workforce in which workers change jobs every few years. As a result, many people have retirement nest-eggs spread among 401(k)s and individual retirement accounts (IRAs) in a number of financial and sponsoring institutions, making it difficult to track portfolio performance, asset allocation, and diversification.
In a rollover, however, your old company makes the check out to you.
Now it's your responsibility to deposit the full amount in your new 401(k) within 60 days or the money is taxed as income and you are slapped with an early withdrawal penalty if you're younger than 55.
It seems that it would be easier for her if something would happen to us. Consolidating far-flung accounts can be a great relief, and not just for your daughter. You can't combine your IRA or 401k with ones in the name of your living spouse, for example.
The move can reduce your own headaches at tax time, possibly allow you to qualify for lower investment costs and simplify the process of rebalancing your asset allocation. Rolling a 401k into an IRA can be done, and you can consolidate traditional IRAs held at different financial institutions.
In a transfer, your old company sends a check directly to your new company and the money never passes through your hands.
That excludes you from having to pay income tax on that money.
Along with the loss of the company pension and the proliferation of the self-directed retirement plan — 401(k)s are the most common form — is a job-churning labor market.
“People who shift from job to job, they accumulate them," says Rick Meigs, president of the non-profit 401 Meigs say his organization gets three or four queries a week from people who’ve lost track of a 401(k) at a former employer.
You may also save money on fees if they are lower at your new 401(k) versus your older one.