What to Do with All Those Old 401(k)s and IRAs
It's about as fun as herding cats, but rounding up all your IRAs and 401(k)s into just one or two accounts can really simplify your financial life.


By age 50, baby boomers have held an average of 12 different jobs, according to the Bureau of Labor Statistics. In many cases, they may have several company retirement plans from old employers, as well as an IRA or two, along with at least one Roth IRA.
By combining these accounts, you may be able to save both time and money and make your life more stress-free. Say, for example, you have three IRAs, two old 401(k) plans, an old Simple IRA and an old 403(b) plan. These seven different accounts can actually be transferred into one IRA. There are several reasons why you might want to do that.
Less Expensive
When you buy or sell an investment, a transaction fee is often charged. If you consolidate your accounts, you may have fewer total buys and sells, which could significantly reduce fees andboost your net return.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
For example, if you wanted to purchase 12 different investments for diversification, by consolidating, you could just buy those 12 investments all in one account.
However, if you had the seven accounts in our example, and you wanted to be diversified over 12 investments in each account to reduce risk, you would be trading 12 investments in seven accounts — or 84 total different investments — which could create a lot more transaction fees.
Also, some companies reduce or waive fees if your account reaches a minimum size, so combining accounts increases the likelihood for this to happen.
Reduces RMD Errors
Once you reach age 70½, you must take a required minimum distribution from your pretax retirement accounts each year. Failure to do so will result in a 50% penalty on the required distribution that was not taken.
If you have multiple accounts, each financial firm will send you paperwork each year to take this RMD. As the years pass it can be easy to overlook paperwork that arrives and miss this required distribution.
You'll find this less likely to happen if you consolidate your accounts and take one distribution from just one IRA.
Simplifies Investing
Consolidating accounts will make it much easier to manage your investments. You can focus on the performance of one account, instead of watching the performance of seven different accounts. It is also more convenient to work with one very good IRA custodian with good service and investment choices rather than seven.
Also, once you retire you may need to structure your investments to get monthly income. With seven different accounts, often people end up getting seven different checks, as opposed to receiving one check on one IRA.
Saves Time
Ultimately, combining accounts will free up time. It will mean fewer statements to read, forms to fill out, information to look up and passwords to remember.
And when you need to make changes, such as an e-mail address or an investment change, you'll only need to make one phone call.
Combining accounts also makes it much easier to verify that your beneficiaries are up-to-date and none are overlooked.
Downsizing, relocating to a retirement community, or moving to be closer to family can increase the chances that you may lose track of old retirement plans, because when you move you may forget to update all the multiple addresses on your retirement accounts. If you consolidate these accounts into one, this is less likely to happen.
Getting Started
While you may not be so lucky as to get all of your different retirement accounts and IRAs into one account, any reduction in the number of accounts will help. Also, once you retire, you may be able to boil your portfolio down to no more than two retirement accounts: a traditional IRA for pretaxretirement accounts and a Roth IRA to combine all the Roth accounts.
When combining retirement accounts, transferring the assets directly from one retirement account to another where you make the check payable directly to the new custodian on yourbehalf is the most hassle-free way to do it. It avoids unnecessary headaches like the 20% withholding on indirect rollovers, or the possibility of missing a 60-day rollover deadline when you take receipt of the funds.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

-
3M, GM, Blue Chips Lead to the Upside: Stock Market Today
The S&P 500 followed the Dow Jones Industrial Average into green territory, but the Nasdaq lagged the other indexes because of its tech exposure.
-
Social Security Payment Schedule for 2026
Find out when you can expect your 2026 Social Security payments and the date you get paid when your scheduled day falls on a holiday.
-
I'm a Wealth Adviser: These Are the Pros and Cons of Alternative Investments in Workplace Retirement Accounts
While alternatives offer diversification and higher potential returns, including them in your workplace retirement plan would require careful consideration.
-
I'm a Financial Planner: If You're Within 10 Years of Retiring, Do This Today
Don't want to run out of money in retirement? You need a retirement plan that accounts for income, market risk, taxes and more. Don't regret putting it off.
-
Five Keys to Retirement Happiness That Have Nothing to Do With Money
Consider how your housing needs will change, what you'll do with your time, maintaining social connections and keeping mentally and physically fit.
-
Treat Home Equity Like Other Investments in Your Retirement Plan: Look at Its Track Record
Homeowners who are considering using home equity in their retirement plan can analyze it like they do their other investments. Here's how.
-
Financial Fact vs Fiction: The Truth About Social Security Entitlement (and Reverse Mortgages' Bad Rap)
Despite the 'entitlement' moniker, Social Security and Medicare are both benefits that workers earn. And reverse mortgages can be a strategic tool for certain people. Plus, we're setting the record straight on three other myths.
-
Medicare Open Enrollment: Why You Need to Pay Extra Attention to Part D, From a Financial Adviser
The lowest premium for prescription drug coverage might not actually save you the most money. Make sure you take copays into consideration and do the math.
-
Five Retirement Planning Traps You Can't Afford to Fall Into, From a Wealth Adviser
To help ensure you reach your savings goals and enjoy financial security in your golden years, be aware of these common pitfalls. The key is to be proactive, informed and flexible.
-
Your 401(k) Can Now Include Alternative Assets, But Should It? A Financial Adviser Weighs In
Many employer-sponsored plans offer limited investment options, which can stunt growth. But participants considering alternatives might need some sound advice to get the most from their accounts.