[Video] Consolidating Retirement Accounts

by Michelle Smalenberger, CFP® / October 11, 2017

What To Consider When Consolidating Retirement Accounts

Are you nearing retirement or maybe in retirement?  Or have you had a 401(k) at an old employer and now need to decide what to do with the different accounts?  Can you consolidate them, move them, or need to just leave them where they are? To move a 401(k) to an IRA you complete what’s called a rollover.  Similarly, a Roth 401(k) gets rolled over to a Roth IRA.  It is a nontaxable event when you are rolling funds over to the IRA.

Let’s talk through some things to consider as you think about this.



Investment Options:

Understand the investments available to you inside your retirement account.  Also know what’s available to you when you roll those funds over.  Typically, you have a limited list of options inside your retirement account, but an unlimited list of options outside your retirement account.

Access to Funds:

In order to take money out for living expenses you can have two very different experiences based on where your money is.  If you funds are still in a retirement account like a 401(k) or Roth 401(k) you may need to contact your old employer’s plan administrator or human resources department to take a distribution.

If the funds are rolled over to an IRA those funds are now in your name so you can sign the necessary forms yourself.  You can even have a direct link to your bank account set up so funds can be directly deposited rather than a check being mailed.


You should have access to know the expense ratio of any funds you are purchasing inside and outside of a retirement account.  In an IRA you should also be aware of any transaction costs to buy or sell an investment.  Examine these before you take any action.

Required Minimum Distributions Required:

At age 70 ½ RMDs are required from a 401(k), IRA, and Roth 401(k).  However these are not required from a Roth IRA. Lastly, you need to understand how funds are rolled over.

There are two types of rollovers:

Direct: Funds sent directly to the IRA custodian.  You are not involved in the transfer of funds.

Indirect: Funds are sent to you first and then you need to forward these to the custodian.  You must understand that with an indirect rollover you only have 60 calendar days to get the funds deposited.  That is not 60 business days, but 60 calendar days.  If funds are not deposited within this time frame the funds become taxable as income.  This is what you are trying to avoid by rolling funds over so it’s important to pay attention to when funds are sent.

If we can help you think through these items we would be happy to!  We would like to help you make sure things are getting done as they should!


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Michelle Smalenberger, CFP®

I have a passion for helping others develop a path to financial success! Through different lenses on your financial picture, I want to help create solutions with you that are thoughtful of today and the future. I have seen in my life the power of having a financial plan while making slight changes of direction from time to time. I believe you can experience freedom from anxiety and even excitement when you know your finances are on track.