Start Consolidating roth ira accounts

Consolidating roth ira accounts

The following example shows when this can and can’t be done.

When you do more than one rollover in a year, any rollovers after the first rollover become excess contributions in the receiving IRA or Roth IRA.

They are subject to a penalty of 6% for year that they remain in the account.

Since I mentioned beneficiaries a moment ago, let me just remind you that this is a good time to check those beneficiary forms on the Roth IRAs that remain after your consolidation.

Be sure that those beneficiaries are still the individuals that you want to inherit your hard-earned Roth account.

What You Can Consolidate If you have both Roth and traditional IRAs scattered in various bank or brokerage accounts, you can simplify your life by combining all of each kind into two accounts.

If you invested your IRAs in CDs (probably not a good idea unless you’re at least 60 years old), wait for each CD to mature before doing this.

Now that you have inventoried and evaluated your portfolio, you may wonder whether you really need to keep all your accounts separate.

In many cases, the answer is no, but there are a few things to consider such as the tax status of the investments you may own.

He could move the $4,500 and $2,500 Roth IRA CDs at his bank into the Roth IRA with his broker.

He could also move the $3,500 traditional IRA he has at his broker into his indexed-annuity IRA.

He will also leave his traditional IRA with the zero balance open because he uses that to fund a backdoor Roth IRA conversion strategy that allows him to make a nondeductible contribution to that account and then convert it to the Roth IRA he holds with his broker.