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Should You Consolidate Your IRAs?

Do you own multiple IRAs at various institutions? Over the years, many investors make annual IRA contributions or complete qualified plan rollovers to different accounts at numerous financial institutions and now find it costly and confusing to keep track of all the accounts.

Or, do you have inherited IRAs held at multiple institutions with limited investment opportunities? If so, consolidation may be the answer to help ease IRA management and to take advantage of the benefits offered at Stifel.

Why not make your life simpler and more convenient?

Consolidating IRA assets at one financial institution, such as Stifel, can offer an array of benefits, such as:

Diversification and Asset Allocation – Maintaining all your retirement assets at Stifel helps give your Financial Advisor a complete view of your portfolio, and he or she can help ensure that your holdings are properly diversified and appropriate for your risk tolerance, time horizon, and overall goals. You may even find that you have increased investment options or an advisory program tailored to your needs at Stifel.

Cost Management – Most firms charge annual account maintenance fees to IRA owners. If you have IRAs at multiple firms, you may be paying multiple fees. It’s easier for you to see how much you’re paying in administrative and other fees by not having several accounts at various financial institutions.

Reduced Paperwork – Consolidation means less paperwork, as multiple accounts mean multiple statements and tax forms. More importantly, consolidation eliminates the need to update paperwork for multiple accounts when you move or when you experience life changes, such as marriage, divorce, or death.

Beneficiary Planning – Generally speaking, whoever you appoint as a beneficiary for your retirement accounts will inherit the assets in that account upon your death. If you have accounts at multiple financial institutions, you’ll have to fill out a separate beneficiary designation form for each IRA held at each custodian. And, if all of your accounts are not kept up-to-date, it increases the likelihood that an incorrect beneficiary designation exists, which could result in unintended tax consequences.

Easier Required Minimum Distributions (RMDs) Calculation – Typically, IRA owners must start taking RMDs from their IRAs for the year in which they reach age 73. If you have multiple accounts, you must calculate the RMD for each IRA you own, although you may then withdraw the aggregated total from any one or combination of your IRAs (not including Roth IRAs).* However, if you happen to overlook one of your IRAs when calculating your RMD and do not fully satisfy that RMD by the deadline, you’ll generally pay a 25% penalty on top of ordinary income tax for taking less than the required amount. Consolidating IRAs to one financial institution, such as Stifel, simplifies this process because Stifel will help calculate your RMDs and provide distribution options and paperwork.

Professional Advice – In addition to aligning your retirement assets with your overall investment strategy, your Stifel Financial Advisor can assist you with more complex IRA-related strategies. For example, your Financial Advisor can provide you with information and advice regarding Rule 72(t) penalty-free distributions for those under age 59½ and assist with estate planning strategies, including Roth IRA contributions or conversions, which offer potentially tax-free distributions to beneficiaries.

Note that in addition to the benefits listed above, Stifel is a full-service firm that can handle most IRA and inherited IRA needs, such as transferring IRAs, processing beneficiary IRA distributions, and allowing beneficiaries to name successor beneficiaries to continue tax deferral. If you have other retirement assets in employer-sponsored plans, such as a 401(k), your Financial Advisor can explain your distribution and rollover options and the pros and cons to help you determine what makes sense for you.

Consolidating your IRAs to Stifel is an easy process. Is it right for you? Contact your Stifel Financial Advisor to find out more information.

* RMDs for Qualified Retirement Plans cannot be taken from IRAs and vice versa. RMDs for beneficiary IRAs cannot be taken from an IRA with a living owner and vice versa.

Diversification and asset allocation do not ensure a profit or protect against loss.