Do You Have Multiple Retirement Plans? How to Consolidate and Maximize Returns

By Brett Gottlieb

It’s rare these days for people to spend their whole career with just one company. And with all the job changes we experience, we may also amass multiple retirement plans from different employers. Add those to any retirement plans you’ve set up for yourself, and you may find yourself juggling various investment decisions, fee breakdowns, and rules for every account in your name.

That’s a headache you don’t need. Have you considered consolidating these accounts to streamline the management of your retirement? If the thought has crossed your mind, the good news is that consolidating your retirement accounts can make it easier to manage your savings. It can also help you possibly maximize your returns. 

At Comprehensive Advisor, we know your retirement is a priority. Below, we have outlined some points to consider before you decide to consolidate your accounts. We hope this serves as a guide as you think about whether this decision is right for you.

Benefits of Consolidation

Consolidating your retirement into a single account can save you on annual maintenance fees, as the fewer retirement accounts you own, the less you will have to pay on the annual fees. Combining your retirement accounts also enables you to streamline your investment strategy to maximize tax efficiency. What if you need to change an address or add a beneficiary? Having just one or two accounts makes tasks like these easier and will help you manage your retirement with more peace of mind.

Perhaps most importantly, though, consolidating your accounts allows you to clearly understand how well your investments are working for you while enabling you to easily tweak the account to meet your retirement goals. For example, with a single retirement account—or just a few retirement accounts—you can easily analyze your rate of return or decide if you need to rebalance your account.

Tax Implications

When you think about whether to consolidate, carefully examine the benefits, fees, and investment options of each account. You may also need to calculate what you could lose if you close the account, while also carefully considering any tax implications of combining one account with the other.

For example, completing a Roth conversion will result in the retirement accounts being converted as taxable income for that year. A Roth conversion is when retirement accounts, such as an IRA, 401(k), 403(b), 457 plan, SIMPLE IRA, SEP-IRA, or Keogh, are rolled into a Roth IRA.[1]

Remember, it may not make sense for you to consolidate all your accounts into one at the moment. While reducing your accounts to one or two may save you some money and headache, it is usually not advisable to combine pre-tax and after-tax accounts. Be sure to work with a professional tax advisor before doing this.

When to Consolidate

If you are still working for a company that is contributing to one of your retirement accounts, you may not be able to move that retirement account to a different provider, but you may be able to move your previous retirement accounts into your current company’s retirement account. Check with the account provider to see if such conversions are possible.

Additionally, the IRS has certain rules pertaining to the timing of the rollovers. For example, you can only make one rollover between IRAs each year without being subject to a penalty tax.[2]

We Can Help

When it comes to all the rules surrounding consolidation, this guide was just the tip of the iceberg. If you are interested in consolidating your retirement accounts but don’t know where to start, that’s okay. We’re here to help. Email us at info@ComprehensiveAdvisor.com or call (760) 813-2125 to get started.

About Our Advisors

Brett Gottlieb is the founder of Comprehensive Advisor and a financial advisor with nearly two decades of industry experience. He graduated from California State University-Chico with two bachelor’s degrees in Business Administration and Economics. Brett is Life Insurance licensed in several states. He is passionate about guiding his clients on retirement income planning, helping each client pursue their specific retirement goals and defending the assets his clients have worked so hard to achieve. Brett is a California native and currently resides in San Elijo Hills with his beautiful wife and three children.

With a combined experience of over three decades in the financial services industry, our advisors hail from some of the largest independent broker/dealers and banking institutions in the country. They have dedicated their professional careers to creating personalized financial solutions for individuals and families who seek successful retirement planning and currently offer investment advisory services through AE Wealth Management, LLC. Our advisors take a common-sense approach to the planning process and work with clients to create a retirement road map to help ensure their assets are protected and they receive the income needed to enjoy their future. Based in Carlsbad, California, they work with clients throughout San Diego County and beyond. Learn more by connecting with Brett on LinkedIn or email them at info@ComprehensiveAdvisor.com.

Comprehensive Advisor, LLC is an independent financial services firm that utilizes a variety of investment and insurance products. Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Comprehensive Advisor are not affiliated companies. C.A. Financial & Insurance Services, CA Ins. Lic. #6000262. This material is intended to provide general information and is believed to be reliable, but accuracy and completeness cannot be guaranteed. Neither the firm nor its representatives may give tax or legal advice. Investing involves risk, including the potential loss of principal. Any references to protection benefits, safety, security, lifetime income, etc. generally refer to fixed insurance products, never securities or investment products. Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.  00970511 07/21

[1] https://www.irs.gov/pub/irs-tege/rollover_chart.pdf

[2] https://www.irs.gov/retirement-plans/ira-one-rollover-per-year-rule

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