Rollover Resources

The Value of Account Consolidation

In 2001, a flood of new legislation known as EGTRRA made it much easier for individuals to manage their retirement savings. The legislation relaxed rollover rules, allowing plan participants and IRA owners greater freedom in moving retirement assets from one type of retirement account to another.

It also paved the way for consolidation of accounts.

In essence, qualified employer plans (e.g. 401(k) and profit sharing plans), 403(b) annuities, 457 plans and IRAs may accept rollovers from one another, even if they are different plan types. Assets rolled over from an employer plan to an IRA no longer have to be held separate from other IRA assets when the taxpayer plans to do a future rollover to another employer plan.

That means that assets from different plans can be consolidated into a single IRA account. What is the advantage? Consolidating accounts offers several benefits:

1. Easier management - many investors find that combining assets into one or two accounts makes it easier to manage their portfolio.
2. Potentially fewer fees - some accounts carry an annual fee, by reducing the number of accounts, some of those fees can be eliminated.
3. Convenient tracking - with fewer accounts, the account holder has fewer statements to review and file.

For more detail on which rollover actions are allowed, check our Rollover Chart.