Consolidating multiple 401k accounts

17 Dec

Gen Xers have almost twice as many job changes as Baby Boomers. The questions you want to ask yourself are: Once you dig a little deeper into all your retirement accounts, you might be surprised to find yourself in what we call “retirement account hell” with multiple statements, different custodians, and diverse investment objectives, paying multiple fees, all working at cross purposes.

So where do you go from here to figure out what your retirement benefits actually look like?

You have probably changed jobs throughout your career.

In fact, the Bureau of Labor Statistics reported in 2014 that the average worker in America changes jobs every 4.6 years.

While the answer is technically yes, you're missing out on a significant number of rewards if you choose this course of action. A rollover 401k account is a Roth IRA or traditional IRA into which you move the actual funds from your previous employer-sponsored retirement plans.

Consolidating your resources into a single rollover 401k has a number of different advantages: 1. When you have one rollover 401k account instead of seven, the actual management and reporting of your respective retirement savings naturally becomes simpler.

Can your retirement accounts be combined into one single account? Most of the time you can combine quite a few - and usually, it makes sense to do so. In general, accounts that function in a similar way can be combined once you are retired.

Most employees will alter their careers at least once in their lives (actually, the mean number of career adjustments is said to be around to 5-7 instances), this results in a number of 'abandoned' pensions and retirement savings accounts.

But perhaps you're looking at the tri-state record for most 401(k) plans held in a single portfolio.

Like trophies of your employment past, you've managed to accumulate a workplace savings plan for every job you've had.

"You may have duplication in your portfolio where you own two very similar funds with regards to investment philosophy and objectives," he said.

"The left hand doesn't know what the right hand is doing." Indeed, investors with multiple 401(k) plans run the risk of being overweight in one or two individual stocks or sectors within their portfolios.