Use This Chart If You Want to Renew Your Retirement Account
Keeping tabs on retirement accounts can be tricky for the average American – more than 25 million workers were left behind when they switched employers between 2004 and 2013, according to the U.S. Department of Government Accountability , transferring hundreds of billions of dollars into lost benefits.
What’s more, you may pay additional fees or reduce the performance of your investment.
This is where consolidation comes into play. Depending on the type of account, you have several other factors; it might make sense to combine your accounts. This way you will know where your money is.
But not all retirement accounts can be transferred to another. While the rules can be complex, the IRS has this simplified spreadsheet to get you started:
As Kiplinger notes , moving employer 401 (k) plans into a single IRA is a way to maintain “tax-free asset status” and provide investment options. You will also cut down on paperwork, and it will be easier for you to determine the minimum payments required to reach retirement age.
But there are reasons to fear consolidation. “You might want to keep the 401 (k) plan, which has cheaper institutional shares of mutual funds and access to commission-free trading, rather than transferring it to another account that does not include these features,” Kiplinger writes. And if you want to retire early, you need an account that allows you to access your money without penalties.
All of the above, see the table above and check your rollover plan rules before you start.