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Consolidate multiple retirement accounts with a rollover

You can take it with you — simplify your finances with a rollover.

Keeping track of different retirement accounts — including the accounts with your current and former employers' retirement plans — can get complicated. A possible solution? If your current employer's retirement plan allows for it, consolidate assets into one account with a rollover.

Benefits of a rollover


1. Simplifies retirement planning
Having all of your retirement funds in one place may help simplify retirement planning. "A rollover also can give you more control over your investment allocation," says Tom Muldoon, an investment analyst with Rockville, Maryland-based Independent Benefit Services.

2. Easier to make changes and manage
With one plan statement to track, one website to access and one phone number to call for questions about account information, it's easier to make changes to and manage how your retirement funds are invested, and track investment option performance.

3. Easier to keep track
Consolidating retirement funds can also reduce the chance you'll lose track of funds in smaller accounts, and it makes it easier to manage beneficiary information.

Avoid cashing out

Taking a cash distribution from a former employer's retirement plan may sound tempting, but most financial experts do not recommend this option. Here's why:

  • In most cases, 20% of your withdrawal will be withheld for taxes.
  • If you're under age 59-1/2, you'll likely owe a 10% early withdrawal penalty on the distribution.*
  • You'll lose the assets' potential for future tax-advantaged growth.

Calculate the cost of cashing out

Cost of Cashing Out Calculator
Find out how much you might pay in taxes and penalties.

Get help from a financial professional

» Find out how a financial professional or advisor can help.

 

*10% penalty is also avoided if the distribution is made after separation from service, if the separation occurred during or after the calendar year when you reach age 55.

Tom Muldoon and Independent Benefit Services are not affiliated with any member company of the Principal Financial Group.

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