Help me combine accounts to simplify things

[disneysteve]

In this thread: Who should my wife turn to when I check out?
a bunch of people recommended simplifying holdings so that the surviving spouse has less to manage after the other one dies. That's great advice but not so easy to do depending on your portfolio.

Over the past few years, I have simplified our holdings some but we still have a bunch of accounts. I'm going to list them here. Tell me what I can combine without having to sell taxable holdings that would create an immediate CG tax bill.

Me:
Trad IRA
Roth IRA
r/o IRA
SEP-IRA
Inherited trad IRA
Inherited Roth IRA
HSA
3 inherited individual stocks held directly with Shareowner (not in a brokerage account)
PayPal account

DW:
Trad IRA
Roth IRA
r/o IRA

Joint:
Taxable brokerage #1
Taxable brokerage #2
Online HYSA
Checking account
I-bonds

Of course, several of these accounts each hold multiple investments also.

I'm thinking I can combine my trad IRA, SEP IRA, and r/o IRA into one and DW's trad IRA and r/o IRA into one. If so, that would eliminate 3 accounts. I can combine the two taxable brokerage accounts if I can transfer holdings in kind and not have to liquidate them triggering taxes. I could move the individual stocks into our brokerage account but I know that requires jumping through hoops and getting medallion signatures because the two accounts are titled differently. I was going to do that last year but never followed through.

Is that everything that can be combined?

 

[Mark1]

Don't forget that in addition to combining, another options is to just spend the account balance down to zero. This has been my solution for some of my smaller accounts.

 

[disneysteve]

Don't forget that in addition to combining, another options is to just spend the account balance down to zero. This has been my solution for some of my smaller accounts.

True, but we're not drawing from retirement accounts yet. Other than cash holdings in taxable accounts, I have sold off some stock holdings over the past few years as well as some shares of one of the inherited stocks but I still own quite a bit of it. And I am taking RMDs from the inherited IRAs but those won't be exhausted any time soon. Well, I could draw out the inherited Roth faster but why sacrifice the tax-free growth?

 

[TickTock]

While combining accounts is a good idea in theory, as you note it can cause tax consequences that may outweigh the simplification benefits (of course, this depends on the individual situation).

Still, paring down total holdings, even if they are spread across different accounts, is a good simplification strategy that doesn't product taxable events.

 

[disneysteve]

Still, paring down total holdings, even if they are spread across different accounts, is a good simplification strategy that doesn't product taxable events.

I have done some of that within retirement accounts where selling shares had no tax consequences. The problem is all of the taxable accounts where selling anything creates capital gains.

 

[TickTock]

Understood. That situation comes down to evaluating whether the simplification justifies the tax consequences.

 

[Montecfo]

You should be able to combine the joint accounts by transfers in kind. Work with your broker.

If you are not planning to rollover your rollover IRAs to a qualified plan which may limit rollovers, you can combine them. (there may be some state law protection that apply to 401k rollover funds, but not IRAs. You might check with your state).

Make sure your joint checking account has survivorship rights.Thus should prevent it from getting shut down when one passes).

I have decided to not do investments which require new accounts such as i-bonds or MYGA. Just not sure it is worth the confusion.

We combined/simplified a few years ago. We each have An IRA and Roth plus one joint brokerage, one HSA, one MM account, one DAF.

Outside i-bonds and CDs all consolidated into brokerage now.

 

[Aerides]

I think less important is the number of accounts, more the number of institutions.

In our case, it's almost all with Fido, so it doesn't really matter how many accounts we have, as it's easy to manage under one umbrella.

We also have individual IRA's, a SEP, HSA, Taxable brokerage, etc. Then checking/savings (those are spread around a bit for FDIC).

In the OP's case I'd look to consolidate the inherited stuff, and look to see if there are institutions that can be condensed without creating taxable events.

But no way would I create a tax/income situation purely for simplification.

 

[pb4uski]

Combine HYSA with brokerage accounts? Perhaps have checking account with banking ATM of brokerage? Also see if brokerage can be helpful in bringing in those stock positions.

 

[disneysteve]

I think less important is the number of accounts, more the number of institutions.

In our case, it's almost all with Fido, so it doesn't really matter how many accounts we have, as it's easy to manage under one umbrella.

We had one institution eliminated for us when Schwab absorbed TD so that helped. I should work on getting rid of Schwab now and moving all of that over to Vanguard. That would definitely help as the total amount with Schwab is trivial, about 2% spread over 3 accounts. I hadn’t fully realized that until now.

 

[disneysteve]

Also see if brokerage can be helpful in bringing in those stock positions.

Yes they can. It’s just a pain because it requires medallions.

 

[SecondCor521]

Agree with pb4uski on the HYSA. I don't have one; I just use VMFXX inside my taxable account at Vanguard. Works well enough for me.

I also agree with your consolidation statements in the OP; they match what I think you can and can't do.

Oh, actually maybe you can move the I-bonds in kind into your Vanguard taxable. I don't know much about I-bonds and whether there are negatives to moving them.

Another simplification you can do is to reduce the number of credit cards you have. Not sure if that is of interest to you. I will do this at some point, but not yet.

 

[disneysteve]

Agree with pb4uski on the HYSA. I don't have one; I just use VMFXX inside my taxable account at Vanguard. Works well enough for me.

I also agree with your consolidation statements in the OP; they match what I think you can and can't do.

Oh, actually maybe you can move the I-bonds in kind into your Vanguard taxable. I don't know much about I-bonds and whether there are negatives to moving them.

Another simplification you can do is to reduce the number of credit cards you have. Not sure if that is of interest to you. I will do this at some point, but not yet.

I probably should ditch the HYSA (Ally). It really serves no purpose at this point and I haven’t actually touched it in ages. Plus there isn’t even much in there ($8,200). I also use my VG VMFXX account as our “cash” account. That has the added benefit of getting steadily replenished by investment earnings. Thank you both for that suggestion. I can do that tomorrow and get rid of that account.

I don’t care about the I-bonds. We hold paper bonds so no actual account involved. She knows where they are and how to cash them in.

I’ve got no issue with the credit cards either at this point.

 

[GoBirds]

Don’t forget to download statements and be sure you will be able to access tax documents come tax time.

With Ally maybe you transfer everything out but leave the account open (assuming no fees) until 2026 taxes are done.

Unless it’s not an issue - I’ve been thinking about doing this with my CapOne since it only has 6k now. But unclear how to get tax documents next year.

 

[Taco]

I think less important is the number of accounts, more the number of institutions.

Definitely this! The number of institutions is the biggie.

A couple of small thing we are doing...
The DW's Trad IRA is smaller than mine, so when we start Roth conversions next year we will start there with the goal of eliminating that account and building up her Roth.
Similarly, she has an HSA from her last employer. She only worked there 4 years before retiring, so the balance was small. We are spending that down and it will probably should be gone this year.

 

[pb4uski]

...Well, I could draw out the inherited Roth faster but why sacrifice the tax-free growth?

I have the same thing. Balance isn't very big... about 2% of total... but why give up tax free status to have one less account?

Like you, I also had a traditional inherited IRA that required RMDs. It was small... less than $20k... and I was afraid that I would eventually forget an RMD and create a problem so I withdrew it. In an obascure way that same money is now in my traditional IRA because I reduced my Roth conversions that year.

 

[pb4uski]

Yes they can. It’s just a pain because it requires medallions.

Is it the current custodian that requires medallion signatures or Vanguard?

Is it better for you to have pain now or for your loved ones to have more pain later?

 

[Winemaker]

While combining accounts may simplify, if I pass, I have several of the accounts go to my kids/grandkids. DW will keep the 7 figure 401k and my Roth for herself. By getting the 3 tIRAs out of my DW's realm, her RMDs will be cut in half, thus cutting her tax burden.

 

[disneysteve]

Is it the current custodian that requires medallion signatures or Vanguard?

VG requires the medallion because the registration of the stock account is different than that of the receiving account.

 

[disneysteve]

I have the same thing. Balance isn't very big... about 2% of total... but why give up tax free status to have one less account?

Like you, I also had a traditional inherited IRA that required RMDs. It was small... less than $20k... and I was afraid that I would eventually forget an RMD and create a problem so I withdrew it. In an obascure way that same money is now in my traditional IRA because I reduced my Roth conversions that year.

I do have an old traditional IRA at Schwab that’s only got 11K. I may draw that down over the next couple of years to eliminate it. Minimal tax impact from that since it’s such a small amount.

 

[Sarah S]

For the stray stocks. I don’t know their value or your philosophy on charities but could you donate one or more ? Perhaps over a few years ?

 

[PaunchyPirate]

I certainly would combine as many of these accounts as you possibly can. I also have abandoned HYSA's in favor of using a brokerage cash management account. I happen to use Fidelity as my consolidated solution. I do still keep about $5,000 in a local brick-and-mortar bank checking account to maintain local bank services.

Other than that checking account, I (as a single person) have one taxable brokerage account, one traditional IRA, one Roth IRA, one HSA, and one Cash Management account.

 

[disneysteve]

For the stray stocks. I don’t know their value or your philosophy on charities but could you donate one or more ? Perhaps over a few years ?

3 stocks with a combined value of over 400K. I actually looked into donating shares but because they aren’t in a brokerage account, the process is convoluted. I really need to move them to the brokerage first and that requires the medallions. Then we can more easily donate them from there.

 

[beanctr88]

There may be an issue combining a contributory IRA with a rollover IRA, especially if the contributory has both deductible and non-deductible contributions in it. I was advised not to do that in my situation.

 

[disneysteve]

Thanks to this thread, I've made the first move. I just initiated a transfer of the full balance of our Ally account to our Vanguard settlement account. I'm not closing the Ally account just yet because I know there will be a May interest payment. I'll go in on 6/1 or 6/2 and transfer that out, record the YTD interest, and then call to close the account. I'm not concerned about taxes because I'll still get a 1099 from them and I'll have a record of the total interest just in case.

Thanks to everyone who has weighed in so far. Even just eliminating one account and institution is a step in the right direction.