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Consolidate Old Retirement Accounts When It Makes Sense [Video]

by Rob Stoll, CFP®, CFA Financial Advisor & Chief Financial Officer / April 3, 2020

In today’s economy it is very common for people to change jobs often as they look to advance their career. Now there is a lot of benefit of changing jobs from a jobs growth standpoint. However, what happens often is when you switch jobs, you leave old 401(k) savings and old plans with your past employers. This is when we recommend you consolidate old retirement accounts.

After a number of years, you might have 5-6 plans. Then you wonder if you are on track for retirement or not. Since you have all these different plans out there it is hard to know.

We are going to talk about two things you can do to simplify your retirement life relating to these old 401(k)s and consolidating.

Current Employer 401(k) Consolidate

Your first option is to look at your current employer. If your current employer has a 401(k) plan and they allow you to bring in your old 401(k)s, you can take all those old 401(k)s and move them right into that plan.

That way, all your retirement money is in one spot. You don’t have to worry about keeping track of all these other accounts. 

Rollover IRA Consolidate

The second option is to do what is called a Rollover IRA. What you do is you open up an IRA with a custodian like Amitrade or Schwab. Then you instruct your old 401(k) providers to move that money over to the new IRA.

Now one thing you want to be careful with is making sure they don’t send you checks from the 401(k). If they do that, it could become a taxable event for you. Make sure if you do move your old 401(k)s into a Rollover IRA, that they move it directly over and you never touch the money.

So these are two ways you can simplify your financial life. When you consolidate old retirement accounts, you’ll have a better grasp of how you are doing with your retirement. You won’t have to manage several different accounts or investment options. If you have a question like this or on any other topic, please feel free to reach out to us!

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Rob Stoll, CFP®, CFA Financial Advisor & Chief Financial Officer

Rob has over 20 years of experience in the financial services industry. Prior to joining Financial Design Studio in Deer Park, he spent nearly 20 years as an investment analyst serving large institutional clients, such as pension funds and endowments. He had also started his own financial planning firm in Barrington which was eventually merged into FDS.