How to Consolidate Multiple Retirement Plans and Maximize Returns

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The average working adult changes jobs 12 times during their career, (1) so there’s a good chance you’ve racked up more than a couple retirement plans over the years. If so, it might be time to consolidate.

It’s not uncommon for people to have three or more different retirement accounts that they are contributing to, some of which may even be at the same institution but in different products like a 401(k) and IRA. If you do have multiple accounts, it may make sense for you to consolidate to minimize taxes and maximize your returns. Let’s discuss how this might work for you.

Understanding Your Options When Consolidating

Different retirement plans have their own benefits, but also their own sets of rules. It’s important to first get an understanding of the rollover options available to you. You may or may not be able to roll some types of accounts into others; some accounts only allow rollovers once every 12 months; and some only let you roll over after two years. (2)

For instance, if you just started a new job and have multiple 401(k)s with previous employers, you may be able to roll them into your new employer’s plan. If your new employer does not offer retirement plans, you may consider an IRA. However, you might have other options available to you as well. Speaking with a financial advisor can be incredibly helpful as you discover your options and chart a plan of action.

How to Decide if Consolidating Is for You

How do you know if it’s time to consolidate? There are a few things you’ll want to consider before consolidating multiple retirement accounts.

  • What kind of benefits and features do your retirement accounts offer?
  • Are there similar investment options in all of your accounts? 
  • What are the fees like on each of your accounts?
  • Can you roll over previous plans to a new employer? Or do you need to move to a self-directed retirement account?

You’ll want to consider these questions before you make any moves. At the same time, you don’t necessarily need to consolidate everything into one. You can consider consolidating some of your retirement accounts and keeping others open. What’s best for you will depend on your specific situation and goals for retirement.

Benefits of Consolidating Multiple Retirement Plans

When it comes time for retirement, there are several benefits of consolidating multiple plans into one account. 

Here are just a few benefits to consider:

  • Reduced investment fees: Fewer retirement accounts can also mean fewer fees. Instead of paying fees for each of your account management services, you only need to pay one—meaning more of your money can grow.
  • More opportunities to save: You can’t contribute to an old employer-sponsored 401(k). You need to roll over the account to a new 401(k) or a self-directed account so you can continue contributing to that retirement fund. 
  • Reduced administrative work for you: Fewer accounts mean simpler management. You don’t need to worry about managing investments and documentation across different platforms. For example, instead of three different monthly statements, you just have one. You can see all your investments in one location for simpler planning.
  • Simpler portfolio rebalancing: When it comes time to rebalance your portfolio, having all your accounts consolidated makes it easier to calculate your asset allocations.
  • Easier calculations and withdrawals of required minimum distributions: If you have multiple 401(k)s at retirement, you need to take required minimum distributions (RMDs) from each of those accounts. (3) When juggling multiple accounts, you risk missing a required minimum distribution, for which the IRS can make you pay a penalty. Having a single account makes RMDs much easier. 

Lastly, one of the biggest benefits of consolidation is saving time. Time is one of your most valuable assets. Having one consolidated account means you’ll spend less time managing all your accounts and free up more time and energy for doing what you love. 

Consolidating Helps You Maximize Returns

Consolidating can mean greater returns and smoother sailing down the road, but it can be challenging to navigate the process. To save yourself time and headache, it’s a good idea to consult an experienced financial professional to help you review your options and show you how to maximize your returns. If you have multiple retirement plans, we’d love to explain our process and see how we can help you, keeping your big-picture financial plan in mind. Contact Shelton Financial Group today by reaching out to us at 260-436-7006 or schedule your free 30-minute Fit Call online

About Shelton Financial Group

Shelton Financial Group is an independent, multi-generational firm in North East Indiana that takes a team approach to addressing their clients' most pressing financial concerns. SFG was founded in 1996 with the mission of helping people enjoy their wealth. Using their proprietary “One Life Formula,” the team at SFG focuses on what matters most to their clients and what they can control, integrating their wealth management needs with other aspects of their financial picture. To learn more about Shelton Financial Group and how they can help you achieve financial independence, visit them online.

The information expressed herein is obtained from sources that are believed to be credible, however, their accuracy cannot be guaranteed. All data is created from publicly available information and has not been independently verified by USA Financial.


(1) https://www.bls.gov/nls/questions-and-answers.htm#anch43

(2) https://www.irs.gov/pub/irs-tege/rollover_chart.pdf 

(3) https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions