Erickson Financial Solutions Blog
Good Reasons to Consolidate your IRAs.
Generally, merging together like-type IRAs, Traditional IRAs with Traditional IRAs or ROTH IRAs with ROTH IRA is a common practice to reduce the burden of tracking multiple accounts. It surely cuts down on the paperwork and accounting problems multiple accounts create.
Another reason to combine like-IRAs is to more easily execute an investment plan.
Also, sometimes accounts might be too small to invest to support your holistic strategy. But by combining it with another or others, it can get working in your favor. It some cases you can reduce the total amount of fees levied against your multiple accounts – who does not want to save on fees.
The last benefit I’ll mention is that when you ultimately must draw money from your Traditional IRA, and some special ROTH IRAs, the calculation, administration of the withdrawals can be cumbersome and prone to mistakes with multiple accounts. The penalty is 50% of the error amount not drawn – Ouch. In consultation with your advisor, generally combining account normally makes good sense. Make life simpler consider combining like-type IRAs.