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Ok I have 4 IRA's, is it best to combine them all into 1 IRA or an Annuity?

Also with this IRA combined I can add $$ to it plus price matching up to 5%...

Jul 11, 2013 by Paul in  |  Flag
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3 votes

Combining them into one IRA is the way to go. No need for an annuity--the major advantage of which is tax deferral--which you already get in your IRA's.

Comment   |  Flag   |  Jul 11, 2013 from Calabasas Highlands, CA

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3 votes
Anil Vazirani Level 8

Combining the 4 IRA's into one or leaving them as is depends on your age, and what you are trying to accomplish as far as diversification is concerned. An annuity does make sense for a part of the portfolio but like I said earlier it is based on your age and your stated goals and objectives. The principle protected low cost new generation annuity is a good fit as a part of the entire financial puzzle. For more information on the principle protected new generation annuity please give Lee a call at 800.957.5604 ext 200.

Comment   |  Flag   |  Jul 19, 2013 from Scottsdale, AZ

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Hi Paul,

By combining all of your IRA's into one IRA, you will find that it is much easier to create and pursue a specific investment policy. Chasing around the holdings in 4 different IRA's, trying to figure out what the "portfolio overlap" is between accounts, and matching your specific risk tolerance - is difficult. So much so, in fact, that most people don't do it. They merely "acquire" investments in a hodge-podge manner in one account, and then the other... until they have... a... mess.

However, by combining all of your accounts into one account you will find it much easier to manage. In the event that you need to make early withdrawals, you may find it necessary to split the IRA again to create an early withdrawal IRA (a 72T IRA)... but let's cross that bridge when (and IF) we come to it!

As far as the annuity goes... no need to add extra cost for no foreseeable benefit.

Good luck.

Jon Castle http://www.Wealthguards.com

1 Comment   |  Flag   |  Jul 11, 2013 from Jacksonville, FL
James D. Kinney, CFP®

Yes you can add money to an IRA, up to $5500 per year, or $6500 if you are over 50 years of age. These contributions may be tax deductible for you, but it depends (for instance if you are participating in your employers retirement plan, you may be able to make contributions, but they may or may not be deductible) It gets complicated, so ask your tax advisor. Not sure what you mean by "price matching up to 5%" - are you cofused with employer plans where employers match your contributions?

Flag |  Jul 11, 2013 near Bridgewater, NJ

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Rich Winer Level 20

Paul, The correct and most appropriate answer to your question depends how you want to manage the investments inside your IRA(s) and who you want to inherit your IRA.

If you want to employ different investment strategies (i.e. stocks in one account, mutual funds in another, maybe tactical in one and passive strategies in another), then it makes sense to have more than one IRA account. You might also manage one yourself and have a financial advisor manage another or you could have different financial advisors managing different accounts using different approaches. There is no one correct approach. That said, if you're using the same investment strategy in all accounts or don't have a focused overall investment strategy, then it would make sense to consolidate your IRAs into one account.

Another reason to have multiple IRAs is for estate and wealth transfer planning purposes. In most cases, it's a lousy idea to name a living trust as an IRA beneficiary, as it can cause a number of problems for the beneficiaries including tax issues and the inability for individual beneficiaries to stretch the IRA distributions out over their individual life expectancies. In the worst case scenario, when there are people, institutions and charities named as beneficiaries in the same trust, naming the trust as an IRA beneficiary can lead to the inadvertent liquidation of the IRA at death (which is most likely not what the IRA owner wanted). However, there are times when someone must leave an IRA to a trust, often when there are control issues or special needs beneficiaries. To avoid potential problems, IRA owners will sometimes split their IRA into different accounts with different named beneficiaries. For example, you might leave one IRA to a trust for a special needs child, another to your favorite charity and a third to your remaining children or grandchildren. The reason for such planning is to ensure that the money in your IRA goes where you want it to go after your death, in the most tax-efficient manner. You want as little as possible to go to the IRS in the way of excess, unnecessary taxes.

In most cases, people will leave their one or two IRAs DIRECTLY to their spouse, children, etc. But it's not always a cut and dry decision and post death IRA distribution planning is complex and often overlooked by estate planning attorneys. Many attorneys don't know about what I just told you, and they will often recommend naming a trust as a primary or contingent IRA beneficiary. To avoid that and other costly, usually irreversible mistakes and oversights, you should consider working with a financial advisor who specializes in retirement distribution planning.

Comment   |  Flag   |  Jul 11, 2013 from Woodland Hills, CA

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1 vote


I am going to concur with most of the answers already provided in that from an estate planning/distribution standpoint it may make sense to maintain separate IRA accounts. However, frequently it is more practical to combine all IRAs into 1 account. The idea here is to "get all the horses to pull in the same direction" that is have the account allocated and invested in an intentional way, instead of putting the portfolio together piece-meal.

I would recommend interviewing a fee-only Certified Financial Planner(R) to not only help manage the investments within these accounts but also help you devise an on-going workable investment and distribution strategy. Since this is the type of issue with various consequences (tax, investment, estate, etc) you need someone who can see the entire picture. If you have several accounts, you are probably getting advice from several places, and the sources of the advice are only providing that advice based on the information they have, not your overall financial picture.

Finally, in your question you mention "5% matching." Accounts not associated with employer-sponsored retirement plans don't normally have any matching component.

Hope this helped.

Best, -Ted

Comment   |  Flag   |  Jul 11, 2013 from Bay City, MI

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1 vote

Paul, if you have 4 IRA’s with reasonably small amounts, it makes sense to put them all together; one statement and one administrative fee. True, if you have estate planning issues, you could have a need for separate IRA's Even then, in some cases, you can assign percentages to multiple beneficiaries in the same IRA.

If you have larger amounts, and want to invest in different types of assets, you might need to have more than one account.

As far as annuities, the only reason I would consider an annuity in your situation is to provide guaranteed income. At this time, in today's economic environment, interest rates are so low that I might discourage you to lock into a low guarantee in an annuity anyway. I would never recommend that you direct more than 50% to an annuity, as, in my eyes, it becomes illiquid. And fees are higher. In case of an emergency, you can withdraw money, but only at the risk of breaking the intended guaranteed income.

Comment   |  Flag   |  Jul 17, 2013 from Delray Beach, FL

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1 vote

If you are referring to a 5% match that you had in your retirement plan at work, the above answers are correct; that is offered by an employer and you will not get that if you are funding your own traditional or Roth IRA (If its a simple IRA from your employer there may be a 2% or 3% match but it doesn't sound like you're talking about this) On the other hand, I'm going to take a shot in the dark on the 5% price matching that it also may have something to do with an annuity sales pitch.

Many insurance salesmen boast a bonus for premiums you put into an annuity, but beware of the sales pitch. Annuities are very complex, and often are much different in reality than the way they are sold to individuals. These bonuses can take up to ten or even fifteen years to really earn them when you factor in surrender costs. Annuities also have high fees in the case of variable annuities, or nickel and dime you on the interest credits with caps or participation rates in the case of fixed or index annuities.

Tread very carefully in the annuity arena. There is a place for annuities in some cases, but not nearly as much as it is sold due to the high commissions it pays salesmen. I would suggest in addition to the person who is selling you an annuity pitch to also seek out a CFP(r) that does not sell annuities to review the pros and cons, so that you can make a better informed decision.

Comment   |  Flag   |  Jul 18, 2013 from Malvern, PA

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