Traditional IRA Question

[haha]

Once you are past 59 1/2 is there any reason not to consolidate all traditional IRAs into one?

I have one fairly large one, and a much smaller one. It seems that it might be easier to manage if it were all together.

Ha

 

[yakers]

I did that before 59.5. For the same reasons, a large one and two small ones. Now one Target Retirement type fund.

 

[crazy connie]

There are a couple of reasons...
Bankruptcy creditor protection limit (rule of thumb) is 1M per account.
Also, nice to have a smaller one as a safety net if the big boy gets beat up too much by the markets. Just a way of keeping a rainy day fund so to speak.

 

[Rich_by_the_Bay]

Can't see any reason why you wouldn't consolidating. Sure makes the book work and monitoring alot easier.

The trick is to find one IRA company that combines all your asset allocations with competitive performance and expenses. I chose vanguard, but will keep my REITs in TIAA-CREF (just a token part of my assets).

 

[haha]

Both of mine are at Fidelity in brokerage accounts. At present they are largely invested in short term govts and TIPS, plus a few index puts. When I might consider a mutual fund, I tend to use ETFs

Ha

 

[Nords]

Once you are past 59 1/2 is there any reason not to consolidate all traditional IRAs into one?
I have one fairly large one, and a much smaller one. It seems that it might be easier to manage if it were all together.

I don't know, but Ed Slott might have written about it in one of his books. You might also want to post your question on his discussion board, where several published CPAs make it their life's mission to give detailed answers to questions like that.

It's possible for IRAs to have a cost basis from non-deductible contributions or 401(k) after-tax contributions. IIRC when you combine the two you'll have to keep track of the cost basis, which might complicate paperwork or tracking.

 

[Martha]

Bankruptcy protection isn't one million per account, it is total for all IRA accounts in your name. And including both traditional and Roth accounts.

 

[theoldwizard]

I don't know, but Ed Slott might have written about it in one of his books. You might also want to post your question on his discussion board, where several published CPAs make it their life's mission to give detailed answers to questions like that.

I like the IRA Help Forum also !

I have used it a few times and gotten very good quality replies.

I also like Ed Slott's book The Retirement Time Bomb ... and How to Defuse It ! Well worth the money !

 

[MasterBlaster]

Bankruptcy protection isn't one million per account, it is total for all IRA accounts in your name. And including both traditional and Roth accounts.

In some states, Rollover IRA's (from 401k's etc.) have unlimited bankruptcy protection. So based on that you may not want to combine rollover IRA's with other IRA's.

 

[Martha]

MasterBlaster, you are absolutely right. I simply forgot. It is a matter of federal bankruptcy law that rollover IRAs from qualified plans like 401ks have unlimited bankruptcy protection. Sorry for the ommission.

 

[haha]

I appreciate all these comments. Thanks!

Ha

 

[teejayevans]

MasterBlaster, you are absolutely right. I simply forgot. It is a matter of federal bankruptcy law that rollover IRAs from qualified plans like 401ks have unlimited bankruptcy protection. Sorry for the ommission.

Is it just bankruptcy protection, or protection from lawsuits in general?
TJ

 

[Martha]

It is just bankruptcy protection. If you don't file bankruptcy then state law governs the extent money in an IRA is exempt from creditors. States are all over the board on how they deal with IRAs. Some have unlimited exemptions. Some limit it by a certain dollar amount. Others provide that money in IRAs are exempt to the extent reasonable necessary for a debtor's support.

 

[teejayevans]

It is just bankruptcy protection. If you don't file bankruptcy then state law governs the extent money in an IRA is exempt from creditors. States are all over the board on how they deal with IRAs. Some have unlimited exemptions. Some limit it by a certain dollar amount. Others provide that money in IRAs are exempt to the extent reasonable necessary for a debtor's support.

So, if sued, a prudent person might want to file for Chapter 11, thereby
protecting their assets in ERISA governed accounts.
TJ

 

[Martha]

Chapter 7 or 13 would be what you would want to file. Chapter 11 is primarily for businesses.