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More than one IRA?
Old 12-11-2009, 10:30 PM   #1
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More than one IRA?

I've currently got an IRA account with Fidelity and maybe rolling over a 401k from a previous employer in the next year. I was just wondering if I should set up another IRA account with someone else, i.e. Vanguard, to "diversify" my savings. While my current IRA accound is diversified is it also a good idea to also go to more than one firm? TIA
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Old 12-12-2009, 07:03 AM   #2
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I believe that having more than one account allows you more flexibility if you should need to take a Section 72t early withdrawal.

Also, you will need to have regular IRA contributions separate from a 401K rollover IRA in any event.
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Old 12-12-2009, 07:35 AM   #3
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Originally Posted by Gumby View Post
I believe that having more than one account allows you more flexibility if you should need to take a Section 72t early withdrawal.

Also, you will need to have regular IRA contributions separate from a 401K rollover IRA in any event.
I agree. Dw has an after tax IRA with Fidelity plus a roll-over IRA with Fidelity and I have an after tax IRA with Vanguard and will eventually also have a rollover IRA.

Starting next year we'll also be creating separate Roth IRA's in Fidelity and Vanguard, and beginning conversions.
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Old 12-14-2009, 04:05 PM   #4
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I am in the more than one category for vaious reasons mentioned as well as investment strategy. It is easier with two to have one in stocks and the other in bonds/cd's. I tend to monitor and trade the stocks, ETF's and ignore the other. It is lest mind confusion to have seperated even though both are at Schwab. Also, if you do need to tap in before 59 and 1/2 it is important to have a set back account to my way of thinking. I currently have a Trad IRA that I draw income from under a 72T, a 401K that I will roll next year to a 2nd IRA, a small ROTH IRA and an after tax trading account. When I roll the 401K there is over 90K that is after tax and will come to me in a check which I will then deposit into a new ROTH. I will consolidate down to a single TRAD IRA and a single Single ROTH IRA once I am over 59 and 1/2. I am keeping employer monies segregated for now in case God forbid I have to rejoin the work force and want to put into a new employer plan.
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Old 12-14-2009, 08:14 PM   #5
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Using different fund companies will also give you a better selection of no-fee funds to select from.
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Old 12-15-2009, 07:50 AM   #6
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Originally Posted by Gumby View Post
I believe that having more than one account allows you more flexibility if you should need to take a Section 72t early withdrawal.

Also, you will need to have regular IRA contributions separate from a 401K rollover IRA in any event.
Gumby......wouldn't it be more accurate to say that it may be useful to keep regular contributions separate from 401K rollovers rather than "you will need to"?
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Old 12-15-2009, 05:37 PM   #7
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I think you are right. I was recalling the last time I rolled a 401k, which was in 2001. At that time, you needed to keep a separate Rollover IRA account if you ever wanted to roll the proceeds to a new employer's 401k. If you mixed it with your other IRA assets, you would be precluded from doing so. However, it appears that the law was changed in 2002. Now, it may only be a problem with the new employer's plan trustee rules, not an IRS prohibition.

In addition to the 72t issue I mentioned earlier, it would also be helpful to keep your rollover amounts (which are 100% taxable when drawn) separate if your regular IRA has any non-deductible contributions (which results in less than 100% taxation depending on the ratio of non-deductible contributions to the total amount)

My apologies to Wormrider for the earlier misinformation.
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Old 12-15-2009, 10:31 PM   #8
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There may be some possible advantages also in keeping the rollover separate for creditor protection (unlimited in bankruptcy for rollovers but not for contributory) but this hasn't been proven in an actual situation yet where a rollover was mixed into contributory.
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