Subhead Resources Virginia

Account Consolidation Considerations

Posted by Busey Bank on May 16, 2022 1:38:01 PM
Busey Bank

The trend to have multiple employers and/or investment accounts is one that we see more and more. Gone are the days of working for one employer your entire career. With online investment platforms, more and more of us have retirement and investment accounts scattered across multiple investment managers.

Two women sit at a conference table looking at some documents.

While proper diversification is important for any portfolio, is that what you are achieving by spreading your hard-earned money out this way? Which accounts could you combine, and which should stay separate? Is it simple to keep tabs on each piece of your financial picture? Are you paying more than you should by having accounts spread out? Do you know what impact your decision in one account has on another? And, as you move closer to retirement, how much time do you want to spend on monitoring these various pieces?

Managing Allocations

Knowing how much you have in different kinds of investments (stocks, bonds, mutual funds, etc.) is really important. Being well-diversified can help you manage risk while still working toward your goals. Are you aware of investment changes in one account that now duplicate holdings in another account? How do you know this? How do you evaluate the overall allocation of a portfolio that is spread over a number of different types of accounts (IRA, 401(k), investment, annuity) at different locations (former employer, online accounts, managed accounts)? In some instances, you may find you could get a clearer picture of this mix when you consolidate accounts.

Over time, some investments may fluctuate more than others. After a while, your mix of investments isn’t the same as when you started. That could mean you’re taking on more risk (or less) than you originally intended. Rebalancing resets your investments so they’re in line with your original mix. It may be a good idea to rebalance your accounts once a year. But which accounts should you rebalance—some, all?

Simplifying Retirement Accounts

With recent changes in tax law and retirement account guidelines, do you know where to start taking money when you retire? Do you know how much you will be required to take and from which accounts? The tax penalties can be severe—50% tax—if you miss certain deadlines. Do you fully understand the tax consequences of taking the income or principal from an account?

You may find that the fewer accounts you have, the easier it is to take care of these tasks. So where to start?

Sometimes the easiest place is to start with qualified retirement accounts. If you have money in plans with former employers, you might be able to consolidate those funds into your account with your current employer. This could have multiple benefits, ranging from fewer accounts to keep up with, to a better fee structure to seeing more of your portfolio in one spot.

If you are close to retiring or being required to take those Required Minimum Distributions (RMDs), simplicity can be a huge factor. Being able to see all of your qualified retirement accounts in one place can provide peace of mind as well as ease of management. After you are no longer able to make certain decisions or are no longer living, it will be much easier for your beneficiary (or beneficiaries) to deal with one consolidated account.

Consolidating assets with one firm may be one of the most efficient ways to simplify retirement distributions. Consolidation not only streamlines your financial situation but provides for greater control over your assets. With only one set of statements and fewer tax forms, you will be better equipped to take required minimum distributions and monitor your overall portfolio.

Consolidation allows you to implement one investment strategy. With all of your accounts in one place, your advisor can ensure you have the right mix of stocks, bonds and diversifying asset classes. Periodic rebalancing will allow for better portfolio decisions to ensure proper diversification and help you avoid duplicate types of investments. As your situation changes and markets fluctuate, it is much easier to manage risk if all your holdings are in one convenient location.

Where you start depends on where you are in life. Time is the one thing most of us want more of and simplifying your investments through consolidation may help give you that. The experienced team at Busey Wealth Management can help guide you through the process of consolidating accounts. Learn more about our suite of retirement planning services at busey.com/wealth-management.

The information provided in these materials regarding your qualified retirement plan(s) is for educational and explanatory purposes only. The Busey Wealth Management team will not make any recommendation or provide any advice as to whether you should rollover or transfer an IRA or plan assets to a Busey IRA. If you are interested in such a recommendation or advice, please consult your Wealth Advisor who will discuss the options and factors to consider in making that decision.

When we provide investment advice to you regarding your retirement plan account or individual retirement account, we are fiduciaries within the meaning of Title I of the Employee Retirement Income Security Act and/or the Internal Revenue Code, as applicable. The way we make money creates some conflicts with your interests, so we operate under a special rule that requires us to act in your best interest and not put our interest ahead of yours.

This is not intended to provide legal, tax or accounting advice. Any statement contained in this communication concerning U.S. tax matters is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties imposed on the relevant taxpayer. Clients should obtain their own independent tax advice based on their particular circumstances.

This material is provided for educational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities.

This presentation is for general information purposes only. It does not take into account the particular investment objectives, restrictions, tax and financial situation or other needs of any specific client.


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Topics: Wealth

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