Here are three reasons you may want to consolidate your retirement accounts.
Consolidation may save you money by eliminating or reducing fees. Fees eat into your bottom line, which is even more crucial once you retire. Member Benefits retirement programs offer low fees that are capped annually, which keep costs in check (mutual funds fees still apply). Ask for a complete list of fees that may apply to each of your accounts, including mortality and expense fees, surrender charges, and custodial fees. Member Benefits does not charge these fees. Visit our Fees Matter page for more information.
As you approach retirement, you need to consider reducing your risk as you have more to lose and less time to make up for market losses before you need the money. If you have more than one account, you may have different portfolios with differing levels of risk, and you’ll need to keep track of all of them.
Feeling comfortable with the level of risk you take when investing is key. Revisit your asset mix periodically to make sure your tolerance for risk matches how you’re investing your money. Having one account makes managing your risk easier to do.
A common reason people consolidate is convenience. Some or all of these might appeal to you.
Less work, more clarity. Managing multiple accounts can be a lot of work. If you have five different accounts, you receive five different quarterly statements. Each one reports the quarter’s activities differently, so it’s no small feat to get a glimpse of your overall situation. Putting your assets in one place, such as with Member Benefits, gives you a clearer snapshot of where you are financially.
Consolidation also makes tracking contributions and withdrawals easier. Because there are limits to how much you can contribute to most retirement accounts—penalties will apply if you go over—multiple accounts require you to more closely monitor where and how much you contribute.
Headache-free RMDs. The Internal Revenue Service (IRS) requires you to start withdrawing required minimum distributions (RMDs) from certain types of accounts, such as a 403(b) and Traditional IRA, generally at age 72 (or 70½ if you turned 70½ before January 1, 2020). When calculating your RMD, you must consider all of your accounts. Although you have some control from where and how you want your RMD to be taken, you are also responsible for communicating your withdrawal plans to all of your account providers. Failing to make your intentions clear can go bad—if an account owner fails to withdraw an RMD, fails to withdraw the full amount, or fails to withdraw by the applicable deadline, the amount not withdrawn is taxed at 50% (IRS).
One point of contact. Questions about your statement or asset allocations can get answered with one phone call or by logging in to one account. And tasks such as updating an address or changing a beneficiary are made simple.
Remember, you can stick with us—we’re here for you up to and through retirement. Take care when moving money so you can avoid common and costly mistakes such as surrender charges and other deferred sales charges. We can help talk you through what to consider. Call us about consolidating your accounts at 1-800-279-4030.