Read time: 3 to 4 minutes
If you’ve had a few jobs over the years (or more than a few), you probably have several different retirement accounts. If so, it may be in your best interest to combine your accounts into one. Here’s why.
Tighter control over your money
If you’ve had a few different jobs over the years, you may have multiple 401(k) retirement accounts. Maybe you even have an IRA or two as well.
While there’s nothing inherently wrong with this, having multiple retirement accounts at different institutions can be confusing, costly, and hard to manage.
The good news is you may be able to combine some of those accounts.
Fewer accounts can save you money
When it comes to investing, costs matter. The less you pay, the more money you get to keep. And combining accounts is one way to potentially bring down the cost of investing.
For example, maybe an old 401(k) account is charging you a maintenance fee that would go away if you combined it with your current employer plan account. Or maybe your current plan gives you access to lower cost mutual funds than your old one.
Fewer accounts can save you frustration
Multiple account statements, forms, website passwords, phone numbers ... there’s a lot to keep track of when you have multiple retirement accounts.
Consider combining accounts to make things simpler. Doing so could make the task of managing your money a lot less frustrating and give you greater control.
You can combine IRAs
Over the years, many people open IRAs at different companies. Combining them could lead to less paperwork and lower costs. A larger balance in a single account, for instance, could mean having a low-balance fee waived.
At Vanguard, with most of our index funds, an invested balance in excess of $3,000 would qualify you to own lower-cost Admiral™ Shares.
You can learn more about why costs matterhere.
Combining accounts can help you maintain a good balance
At least once a year, it’s smart to check and make sure you still have a mix of investments that’s well balanced. This can be easier to do when you have only one account.
When you have multiple accounts, there’s a tendency to look at each one individually. That can leave you with a skewed picture of your overall mix of stocks, bonds, and cash (a money market fund, for example).
Don’t miss the big picture
Let’s say John has three accounts. He gets a statement for one of them that shows 90% of his money is invested in bonds.
On its own, this might seem overly conservative. But, if John’s other accounts are more heavily weighted in stocks, his overall portfolio might be well diversified.
Having his money in three places at once makes figuring his overall investment mix complicated. He might be better off combining the three accounts—or getting professional advice.
Here’s how to get started
If you have a balance in a former employer’s retirement plan, in most cases you can roll over the money to your current employer’s plan.
To do this, you'll need to:
- Contact the company that sends you statements for your old 401(k) plan. Most likely, there will be paperwork to close that account.
- Call Vanguard at800-523-1188Monday through Friday from 8:30 a.m. to 9 p.m., Eastern time. A Participant Services associate can provide you with additional information and send you a Qualified Rollover form.
How to roll over an IRA to a Vanguard IRA®
Alternatively, if you’re interested in rolling over an outside account into a Vanguard IRA, call800-551-8631orclick here.
HELPFUL HINT
If you roll over your old plan money into your current plan, you might be able to access the money through a loan.
Whenever you invest, there’s a chance you could lose the money. Diversification does not ensure a profit or protect against a loss.
