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Ask Money

Consolidate retirement savings or not

Chris Farrell Mar 3, 2011

Question: Hi, Chris. Recently I returned to corporate life after seven years of working for myself. A few years ago I moved my 401(k) account balance, accumulated over eight years, to an Allianz IRA. (And I opened a Vanguard Roth IRA at the same time.)

My question: When I’m eligible to participate in my new company’s 401(k) plan, should I rollover my Allianz account into the new plan or simply start a new account at my employer? I’m not sure if should have three retirement accounts or just one. I appreciate your insight. Michael, Scottsdale, AZ

Answer: The first thing to check is whether your new employer will accept the transfer. A majority of company 401(k) plans do these days, but not all.

Assuming the answer is yes, my bias is for you to keep the retirement plans separate.

The reason is that you moved your previous 401(k) into a rollover IRA with investment choices you like. I assume you’re still pleased with the choice. It isn’t that difficult to oversee three different retirement plans.

There’s one circumstance where I would recommend consolidating your rollover IRA into your new 401(k) plan: The new plan offers good investment choices at razor thin fees. In other words, you’ll end up with a better overall portfolio and lower fees.

Other than that scenario, your fine keeping the three plans.

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