Do you have retirement plans from more than one employer? Or multiple IRAs? If so, it might be a good idea to consolidate your retirement accounts.

Here are five reasons consolidating your retirement accounts makes sense.

  1. You’ll spend less on account fees. One of the best ways to increase your investment returns is to reduce the investment fees you pay. Each of your retirement accounts charges you fees. Some charge an annual fee, some charge a fee for each transaction, some charge as a percent of your assets, and some charge a minimum balance fee. Consolidating your accounts reduces the number of fees you’ll pay and makes it easier to track which fees you’re paying.
  2. It’s easier to manage your investments. As a retiree, you want to structure your investments to meet both your short-term needs (providing a steady income stream) and long-term goals (generating investment gains). With multiple accounts, tracking investment performance and maintaining a targeted asset allocation between stocks, bonds, and other diversifiers can be challenging. Consolidating your retirement savings makes it easy to see exactly what you have and how it’s invested.
  3. RMDs will be easier to track. Once you reach age 72, the IRS generally requires that you withdraw a minimum amount from your pre-tax retirement accounts each year. These required minimum distributions (RMDs) must be calculated separately for each account. If you fail to take an RMD, you’ll have to pay the IRS 50% of the amount you should have withdrawn as a penalty. Consolidating your accounts minimizes the chances that you’ll overlook one of them and incur that penalty. Learn more about RMDs.
  4. It’ll save you time. Consolidating your accounts means you’ll spend less time trying to familiarize yourself with multiple providers’ websites and have fewer passwords to remember. You’ll receive fewer statements and 1099-R tax forms, which will make recordkeeping and filing your taxes easier. All that adds up to more time to spend doing what you want to do.
  5. Your loved ones will thank you. Dealing with the loss of a friend or family member is painful enough. Spare your loved ones the headache of dealing with multiple account types with different providers after your death by consolidating your accounts today.

The best way to consolidate retirement accounts is by “rolling over” your assets. With a rollover, assets are transferred directly from one account into another. Because the money was never in your hands, you won’t pay any penalties for early withdrawals or income tax on the amounts you roll over.

You can learn more about rollovers and which accounts you can roll to MERS at www.mersofmich.com/mers/rollover.