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Account Consolidation

Benefits of Consolidating Retirement Accounts.

Many Americans are frequently changing jobs, which often leads to acquiring multiple retirement accounts. While saving for retirement is great, managing multiple accounts can be challenging and may result in overexposure to investment risk, management neglect, and unnecessary costs.

Key benefits of consolidating your savings into a single account

Control Risk Exposure

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Simplify Management

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Access Information Quickly

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Lower Costs

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Having multiple accounts invested in different funds can lead to overlapping investments and higher exposure to certain sectors or companies. For example, you might be invested in similar growth funds across different plans, both favoring technology companies. This results in higher exposure to a potentially volatile sector.

By consolidating your nest egg into one account, you can easily track underlying investments and control your investment objectives and risk exposure. Additionally, holding company stock in multiple retirement plans can lead to a large portion of your money being invested in just a few businesses. If one of them fails, a significant chunk of your nest egg could be at risk. Aggregating your funds into one plan allows you to reallocate money to reduce exposure.

Managing multiple accounts means multiple rebalancing sessions and statement reviews. Consolidating retirement plans reduces the time spent analyzing your overall asset allocation and rebalancing, giving you more time to focus on what you enjoy.

With only one account to track, you need to remember just a few ways to get information: one website, one phone number, and one plan sponsor.

The more retirement accounts you have, the more management fees you pay. Consolidating accounts can help put more of your money in your pocket during retirement.

If you decide to consolidate your accounts, a direct rollover is often the best option. You can either roll your savings over to your current employer’s retirement plan or to an Individual Retirement Account (IRA).

What is a Rollover?

A rollover involves moving your funds from an existing retirement account at a previous employer to an account at a new one. If you change jobs, your 403(b), 457(b), or 401(k) investment can retain its tax-deferred status; you'll pay taxes once you withdraw it. The rollover may take up to 90 days to appear in the new account.

Benefits of a Rollover
Combining your retirement assets can simplify managing your retirement income. Consider these key benefits:

  • You may be able to borrow against your retirement account if plan loans are available.
  • Under Federal Law, assets in an eligible retirement plan are protected from claims by creditors.
  • Your new retirement plan may have lower administrative and/or investment fees.

More Potential Rollover Benefits

  • Tax Savings: You won’t pay taxes on potential growth until you make withdrawals.
  • Access to Your Money: You may have access to investment choices, loans, distributions, and other services and features not available in an IRA.
  • Delayed Required Minimum Distributions (RMDs): If you are still working, RMDs may be delayed beyond your RMD age.

If you’re thinking about retiring or changing jobs, you have an important decision to make.

For years you may have been accumulating assets for retirement by participating in your employer’s 401(k), 403(b), 457(b) or other retirement plan. If you’re about to retire or leave an employer for a different career opportunity, you have to make one of the most important financial decisions of a lifetime. With a decision of this magnitude, you need to make a thorough analysis of the options available and how they will impact finances.

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