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Consolidating Multiple Employer Plans

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  • Consolidating Multiple Employer Plans

    So I'm trying to help out my folks with their retirement planning.  Dad is 68, mom is 70.  Mom required to start taking RMDs next year.  Both have a few old employer plans where money is still sitting.  My mom currently has a SEP and is winding down her work schedule.  Dad plans on retiring next year and currently has an employer plan where he contributes to a Roth 401k as well as receives employer contributions (treated as pre-tax), which are separated and held by Vanguard.  I don't see any benefit to consolidating all these funds into any given 401k/403b at this point given the costs of 401k management and that of the underlying funds.  They're too close to retirement and age (and with little interest at this point) to do any backdoor Roth movement.  So my thoughts were that the most efficient/consolidated thing to do would be to get all these funds into a traditional IRA (allocated to the proper parent) held in Vanguard for low expense ratios and ease of access.  There might be some messiness to this in terms of in-kind transfers and waiting for funds to get there, but other than that I don't see many downsides.  Trying to make things easy for them, create as low cost situation w/ optimal fund access without all the headaches of having to track multiple accounts across multiple banks.  Thoughts?  Thanks everyone!

  • #2
    WCICON24 EarlyBird
    Yes, I think you will do them a great service by consolidating into individual IRAs, which will eventually receive the employer plan money. If you believe Vanguard is the best repository for their IRAs, then use Vanguard.
    My passion is protecting clients and others from predatory and ignorant advisors 270-247-6087 for CPA clients (we are Flat Fee for both CPA & Fee-Only Financial Planning)
    Johanna Fox, CPA, CFP is affiliated with Wrenne Financial for financial planning clients