Consolidate Your IRAs to Reduce Maintenance Fees

Both my husband and I have several traditional and Roth IRAs. Some of these accounts charge an annual maintenance fee. Can we consolidate them to reduce the cost?

Yes, each of you can set up a traditional IRA and a Roth IRA and consolidate all of your funds into those accounts. Not only will consolidating save you money by trimming maintenance fees, it will make it easier for you to keep track of your investments. However, you and your husband cannot combine your separate IRAs into a single account; they must remain separate.

Some firms, such as TD Ameritrade, charge no annual maintenance fees for IRAs. But even if you choose a firm that usually charges a fee, you might be able to avoid it by keeping a certain amount of money in your accounts.

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Vanguard, for example, charges $20 a year for all IRAs with balances of less than $10,000. But you can avoid the charge if your household has more than $50,000 in total assets with Vanguard or if you sign up to receive statements and other documents electronically.

But even though you can consolidate all of your traditional IRAs in one account and all of your Roths in another account, it might not always be a good idea, says Maria Bruno, of Vanguard's Investment Counseling and Research Group. If you keep money from a previous employer's 401(k) in a separate rollover IRA, for example, you may be able to roll that into a new employer's 401(k) in the future. And with Roths, it may be a good idea to keep accounts you've converted from traditional IRAs separate from contributory accounts because there are different rules regarding the holding period before you can get access to your earnings tax-free, she says.