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Question for the Money Doctors

Question submitted on Mar 1, 2021.

Question

I need to consolidate my retirement accounts.
And I need to make a decision on how to consolodate them. Some conversation on this issue? thank you

Answer

Consolidating retirement accounts that may have been accumulated over a number of years makes sense for several reasons.  A few things to keep in mind: 1) Most "qualified" retirement plans can be rolled over to an IRA without triggering any tax; 2) if you have any after-tax or Roth funds within your retirement account, be sure to handle that properly if you do a rollover.  For example, Roth funds within a qualified plan can generally be rolled to a Roth IRA; 3) if you are rolling a qualified plan account to an existing IRA, make sure you are not mixing pre-tax and after-tax funds; 4) if you are consolidating multiple IRA rollover/qualified plan accounts, it is generally best to consolidate using a trustee-to-trustee transfer, versus the money passing through your hands.  The custodian or plan administrator should understand what that means and be able to assist.  You may also want to consult with a tax advisor if you are rolling over multiple retirement accounts at the same time.

Lastly, if you are considering rolling over a 401k plan account that owns stock in your employer-company, you may want to discuss your options with someone in your company's benefits group and/or a tax advisor.  Hope that helps.


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