Over the course of our working years, many of us hold several jobs with various employers or even have multiple careers. We have participated in retirement savings plans and may or may not have rolled them over upon leaving the former job and moving on to the next one.
Approaching retirement and recognizing the pending need for retirement income may be the first time we have considered from where the money we need to pay bills each month will come! So, we must consider the question: “Should I Consolidate My IRA’s?” Most times the answer to our question is a resounding “YES!” Several factors work together to elicit this response.
Simplicity, coupled with flexibility and control, makes your investment allocation easier to tailor to your values, goals and risk tolerance, as well as make your retirement income planning more efficient. When we reach age 701/2 and are required to take our first RMD (required minimum distribution), the issue is even more critical as there is a 50% penalty for not withdrawing the required amount. Calculating and withdrawing the RMD from one IRA is easier than dealing with multiple IRAs in various accounts, various institutions or even at former employers.
What is the process to consolidate?
1. Accounts that can be consolidated include your 401(k) and profit-sharing from former employers, Traditional IRAs, SIMPLE- IRAs (if at least two years after first participation), SEP-IRAs, and Individual 401(k)s.
2. Gather a current statement for each IRA. The statement must be within the last 90 days.
3. Meet with your financial consultant to open an IRA account (if you don’t already have one) and complete the required transfer paperwork. Understand there may be fees from the releasing companies as you consolidate into one IRA account.
What are the benefits?
1. A comprehensive investment strategy to fit your values, goals and risk tolerance.
2. Streamlined paperwork and potentially lower and fewer fees.
3. Beneficiary organization and planning.
4. Consistent guidance and service.
5. Simplified retirement income planning and RMDs.
The Financial Consultants at Founders Federal Credit Union are skilled in IRA consolidation and available to counsel with and guide you through this process. Call 1-866-739-7064 to make an appointment today!
Securities and investment advisory services offered through Cetera Advisor Networks, LLC, Member FINRA/SIPC - Founders Federal Credit Union, Founders Financial Group, LLC and Founders Insurance Services are not affiliated with Cetera. Investment Services is a department of Founders Federal Credit Union. Registered Sales Branches are located at 607 N. Main Street, Lancaster, SC 29720; 1290 Old Springdale Road, Rock Hill, SC 29730; 100 Springcrest Drive, Fort Mill, SC 29715; 1307 Boiling Springs Road, Spartanburg, SC 29303.
Not NCUA Insured - No Credit Union Guarantee - May Lose Value - Not Deposits - Not Insured by any Federal Government Agency.
This article was written by Kristen Davis Rhyne, CFP® with Founders Investment Services Team. It was published in Founders Springtimers Newsletter (April 2013).