Wednesday, August 27, 2014
YOLO COUNTY NEWS
99 CENTS

Nest egg can consolidate 401(k) and IRA savings

By Tim Grant
Pittsburgh Post-Gazette

It is not uncommon to wind up with multiple 401(k)s after switching jobs a few times during the course of a career.

Companies usually allow employees to leave their money in the plans even after they leave the company, although non-employees are not allowed to make contributions.

But many financial advisers say it could be better to combine old company retirement accounts into a single 401(k) offered by a current employer or roll all of the old accounts into an IRA.

“We actually see this quite a bit,” said Dawna Kopko, a senior investment adviser at PNC Wealth Management in Pittsburgh. “Someone could have five or six different 401(k) accounts invested in different ways that do not work together for their long-term plans. “It comes down to asset allocation, which is the mix of stocks and bonds in a person’s investment portfolio,” she said. “An individual with multiple 401(k)s with different companies may wind up at age 65 without the investment mix that they really need.”

At a time when workers are becoming responsible for funding their own retirements through company 401(k)s or IRAs, they also find themselves more vulnerable than ever before to being downsized, outsourced or forced to take early retirement — all of which may cause them to change jobs frequently.

Most financial advisers recommend consolidating scattered 401(k)s not only to manage them better, but also to establish a strategy based on their current needs and goals and the market today, rather than one that reflects their past views or the limited options they might have for investing in an old company 401(k) plan.

Robert Fragasso, chairman and CEO of Fragasso Financial Advisors in Pittsburgh, said the fees charged by an IRA are likely to be lower than the management fees charged to accounts in a company 401(k) plan. An IRA will probably have more investment options than a company 401(k), and having one IRA allows the investor to focus on the portfolio’s allocation, rather than have multiple uncoordinated accounts.

“No matter how large the range of choices in any 401(k) plan, the number is dwarfed by the range of choices available to the individual investor in an IRA rollover,” Fragasso said. “There is, thusly, the opportunity in the IRA rollover to scour the world for the best mutual funds to use as well as individual securities, if appropriate.”

One disadvantage of consolidating multiple 401(k)s to a single IRA is that in many states, money in an IRA does not receive the same protection from creditors and lawsuits that 401(k) plans receive. This could be an issue for people working in professions — such as medicine — that tend to attract lawsuits.

Kopko, of PNC Wealth Management, said the average investor would reap the biggest benefit from consolidating 401(k)s in the reduction of management fees. Most financial institutions, she said, have breakpoints in the fees they charge to manage an account based on the amount of assets under management.

“That means if you have five $100,000 accounts as opposed to one $500,000 account you will likely pay more fees for the multiple accounts if they are scattered,” she said. “Also having one account will help the family if something happens to the individual. There are steps family members have to take for an inherited retirement account and consolidation will also ease those headaches.”

— Reach Pittsburgh Post-Gazette reporter Tim Grant at tgrant@post-gazette.com.

Comments

comments

Scripps Howard News Service

.

News

City, plaintiffs settle suit over water rates

By Dave Ryan | From Page: A1 | Gallery

 
Scrap the MRAP, council says, but wants a talk with cops

By Dave Ryan | From Page: A1 | Gallery

Yolo grows sunflower seeds for the world

By Margaret Burns | From Page: A1 | Gallery

 
True Blue Devil Arnold gave back starting in high school

By Bruce Gallaudet | From Page: A1 | Gallery

Gaza cease-fire holds as sides weigh gains

By The Associated Press | From Page: A2

 
California beach town sees flooding from hurricane

By The Associated Press | From Page: A2 | Gallery

 
Assembly passes campus sexual-assault bill

By The Associated Press | From Page: A2

American militant reportedly killed in Syria

By The Associated Press | From Page: A2

 
Sunder campaign distributes signs

By Enterprise staff | From Page: A3

Dinner, auction benefit Yolo County CASA

By Enterprise staff | From Page: A3

 
Farmworkers’ son wins prestigious NIH scholarship

By Julia Ann Easley | From Page: A3 | Gallery

Interested in Portuguese? Drop by I-House

By Enterprise staff | From Page: A3

 
Play groups offered by Center for Families

By Enterprise staff | From Page: A3

Solar-cooking workshop set at Food Co-op

By Enterprise staff | From Page: A3

 
Give blood and get a free movie ticket

By Enterprise staff | From Page: A3

Chat with Poppenga at coffee shop

By Enterprise staff | From Page: A3

 
Raley’s pays $1.6 million to settle hazardous-waste lawsuit

By Special to The Enterprise | From Page: A4

Back-to-school party benefits Archer campaign

By Enterprise staff | From Page: A4

 
Breast cancer program examines surgery

By Enterprise staff | From Page: A4

Crisis nursery bill on governor’s desk

By Enterprise staff | From Page: A4

 
Global warming on group’s agenda

By Enterprise staff | From Page: A4

A sweet reward for turning in cash

By Kathy Keatley Garvey | From Page: A4

 
Yolo Federal to hold photo contest

By Enterprise staff | From Page: A4

Try yoga, meditation at Holistic Health Center

By Enterprise staff | From Page: A4

 
Troops get ‘Hugs From Home’

By Special to The Enterprise | From Page: A4

 
Documentary reveals ‘The Village Under the Forest’

By Special to The Enterprise | From Page: A5

UCD West Village gets an electric Zipcar

By Special to The Enterprise | From Page: A5

 
Little Rock hero featured at reunion

By Enterprise staff | From Page: A7

 
UCD ranks No. 16 for serving the public interest

By Special to The Enterprise | From Page: A7

Wolk’s infrastructure bill clears state Senate

By Special to The Enterprise | From Page: A9

 
.

Forum

Parents could use a hand at home

By Creators Syndicate | From Page: B5

 
Obama risks alienating Latinos

By Tom Elias | From Page: A6

A water plan for all of California

By Special to The Enterprise | From Page: A6

 
Tom Meyer cartoon

By Debbie Davis | From Page: A6

MRAP sends the wrong message

By Letters to the Editor | From Page: A6

 
Play structure idea endorsed

By Letters to the Editor | From Page: A6

Thanks for firearms info

By Letters to the Editor | From Page: A6

 
.

Sports

Buschman, Cats mute the Sounds

By Enterprise staff | From Page: B1

 
New coach eager to see his Aggie charges hit the courses

By Bruce Gallaudet | From Page: B1 | Gallery

Shaw respects Aggies, while Gould is happy to get a shot at Stanford

By Bruce Gallaudet | From Page: B1 | Gallery

 
Devils prep for tough 2014 volleyball schedule

By Chris Saur | From Page: B1 | Gallery

Bumgarner deals as Giants blank Rockies

By The Associated Press | From Page: B1 | Gallery

 
Carter’s blast send Astros past A’s

By The Associated Press | From Page: B2

Sports briefs: Online registration ends Friday for Labor Day Races

By Enterprise staff | From Page: B8 | Gallery

 
.

Features

Field to fork: Play catch-up with summer’s produce

By Dan Kennedy | From Page: A10 | Gallery

 
.

Arts

.

Business

.

Obituaries

Franco M. Navazio, M.D.

By Special to The Enterprise | From Page: A4

 
.

Comics

Comics: Wednesday, August 27, 2014

By Creator | From Page: B6