Splitting Your Portfolio Between Different Accounts

[megacorp-firee]

I am ready to FIRE... I have my money in the following different accounts

Schwab - Roths and and 2 residule stocks - about 10% of total holdings
Ameriprise - income producing preferreds and such - 20%
401K - 70/30 equities/bond AA - 60%
Cash in banks/cd's - 10%

I am considering taking 401K and rolling to Vanguard and duplicating the portfolio with VG index mutual funds.
An alternative is to roll 401K to Ameriprise and do the same with ETFs.

Question: what are the pro's and con's of having everything in one account
Thanks.

 

[figner]

Here are the ones that come to mind off the bat.

Pros:

• Easier maintenance and rebalancing of portfolio.
• Less paperwork (keeping up to date with beneficiary designations, changes of address, etc).
• Easier for your heirs to deal with fewer accounts.
• Higher balances in one account may earn you more perks/discounts from that brokerage.

Cons:

• If you were thinking of doing 72t IRA withdrawals from only part of your IRA, separating the IRA into multiple accounts is the only way I know of to do this.
• Company-specific risk: if the company holding your assets has a major event like bankruptcy, your assets might be inaccessible for some period of time (I dunno what's typical though), even if they're SIPC insured.
• There might not be one company that is best for all types of your investments. For instance, it might be better financially to buy Vanguard funds directly from Vanguard, but not use their brokerage services for other assets due to higher fees.

 

[allen76]

You didn't mention your age and whether you would need to draw on IRA prior to 59.5.

To avoid the hassles of SEPP, would leave a bridge of cash to penalty free/non-72t IRA withdrawals in stable value fund within your 401k.

I recently FIREd, well kind of, as I work as a contractor for another company.

Left my cash bridge in my 401k at my old company and rolled the rest into Vanguard. Used a number of mutual fund companies over the years for myself in taxable accounts and for my kids' UGMA accounts. My experience has been VG has generally lower costs, web site is good, there is a sufficiently broad range of product offerings, plus have found that as a Flagship guy due to my total account balance, I get a couple of nice perks if I want to use them.

I do have a lot of eggs in the VG basket, not only mine, but my kids as well. But, you can't beat the flexibility, convenience and consolidation of record keeping - not to mention how much easier it is to periodically rebalance back to my preferred AA.

Final analysis; it is what you will be comfortable with and what affords the least amount of hassle.

Easy

 

[megacorp-firee]

You didn't mention your age and whether you would need to draw on IRA prior to 59.5.

I am 56 and will not have to dry on 401K/IRA prior to 59.5. So those set of decisions don't come into play.

I guess anything can happen, but if VG went under, we probably have more things to worry about ... although the word 'Enron' does linger in my thoughts...

 

[TromboneAl]

See this thread.

 

[aenlighten]

If you were thinking of doing 72t IRA withdrawals from only part of your IRA, separating the IRA into multiple accounts is the only way I know of to do this.

The minimum for a 72t is so small, the only reason I can see for doing this is if you might need to tap into the other one early after you had already started a 72t on the first one.

 

[SteveR]

I had stuff spread out all over the place. I have consolidated many things into four major institutions for ease of transfer, ease of sale, ease of purchase and ease of income sweeps within the institution.

I also manage my mother's stuff and she has accounts at several different places. My plan is to move about 80% of her stuff to Vanguard so it is easier for me to keep track of and to get income streams into her checking account.

Go with what works best for your situation and with the least cost.

 

[figner]

If you were thinking of doing 72t IRA withdrawals from only part of your IRA, separating the IRA into multiple accounts is the only way I know of to do this.

The minimum for a 72t is so small, the only reason I can see for doing this is if you might need to tap into the other one early after you had already started a 72t on the first one.

Hmm, I haven't researched this much yet, but was thinking I could do it as sort of a disaster-proofing strategy. Let's say I have equal amounts in 2 IRAs and only use 72t on one of them. If I get hit with extreme market volatility that causes the 72t's to deplete the IRA, at least the other one will be untouched (though probably also reduced in amount), and I can wait years for the untouched IRA to bounce back, while withdrawing from taxable accounts, or maybe going back to work in the extreme case.