Combine IRA Accounts

[Guest luuuliu]

I have two questions on combining IRA accounts:

1. I have an existing IRA rollover account from a former employer's 401k. I just left my job so I plan to roll my 401k to an IRA rollover account again. Can I just roll it into my existing IRA Rollover account? I know that I should not blend two different accounts together if I plan to roll to my new employer's 401k. But does this rule apply if both of the accounts are 401k.

2. I have a Roth Rollover account which I have paid all the taxes. Can I combine it with my regular Roth account?

Thanks,

Lu

[BPickerCPA]

1. You can combine the two rollover IRAs.

2. You can combine the two Roth IRA accounts.

Starting in 2002, there would be no reason why one could not combine rollover IRAs with regular IRAs.

[Guest luuuliu]

Thanks, Barry.

Just want to make sure that I can still roll over to a new 401k later after I combine the two 401k to one IRA rollover account.

Thanks,

Lu

[BPickerCPA]

You will be able to roll the combined IRA into a new company's 401k, if that 401k permits it. They don't have to.

As of 2002, you can roll ANY IRA into a 401k, again, if that 401k permits it.

[John G]

Supplementing Barry's comments:

The best way to combine IRAs is to do a direct transfer. Try to avoid having a check sent to you. If both accounts are with the same custodian, often a letter of instructions is sufficient. If two different custodians are involved, get the receiving firm to give you the special form that authorizes them to vacuum the assets from the other custodian into your account. Be aware that custodians often like to charge account close out fees (sometimes $100) and some investments may have constraints such as backend loads on some mutual funds. Stocks and most mutual funds can be transfered whole, but if you do not specify the custodian you are leaving may liquidate your holdsings (pocket the commissions) and transfer just cash. In the case of CD's you can ussually specify the transfer on the date of maturity to avoid penalties.

In all cases, follow up all instructions to insure that they have been completed. This means reading all the mailings and checking your monthly statement carefully. Never assume that requests are done per your instructions, on time, or without error.