Mutual consolidating savings
The fewer retirement accounts you have, the easier it is to keep your overall investment plan on track.In some cases, it may even be worth paying a little bit more in order to have all your retirement money in one, easy-to-manage account.
But some 401(k)s offer even better and lower-cost mutual funds than you can get from an IRA or from your current employer plan, in which case you might be better off leaving that money where it is instead of consolidating.
If your income is too high for regular Roth IRA contributions, you might be interested in using the ‘Backdoor Roth IRA’ strategy.
The catch with this strategy is that it typically requires you to not have any money in a traditional IRA, at least if you want to avoid taxes.
If you’ve been saving for retirement for a number of years, all the while advancing in your career and moving between jobs, you might have a number of different retirement accounts spread out across a number of different companies. You might start to lose track of where each account is, which ones you’re contributing to, and how you’re investing within each one. Maintaining multiple plans might keep you invested in higher cost mutual funds than are available elsewhere, as well as making it difficult to both implement your desired investment plan and to rebalance over time as the markets shift, all of which can make it harder for you to reach your ultimate investment goals.
Consolidating your retirement accounts can solve a lot of those problems, but figuring out when to consolidate and how to consolidate the right way isn’t always easy. Before getting into the decision about whether or not to consolidate your retirement accounts, it’s helpful to understand which accounts you’re even to consolidate in the first place.
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Here are the major factors you should be considering as you decide whether or not to consolidate your retirement accounts.