How should I Contribute to my Multiple Retirement Accounts from two Different Employers?

An individual can most certainly have more than one retirement account. There generally is no restriction on the number of considerations one has. The legend has it that one retirement account makes sense, but multiple retirement accounts make much more sense than usual. Following are the reasons why it is recommended for individuals to have more than one such report:

Clearer financial scenario- A certain percentage of people who rely on various retirement savings. They find it practical to distribute their funds into different accounts and use them for specific purposes. According to them, this ensures proper allocation and reduces wastage.

Reduces risk-Diversification is, again, a practical approach. In case you are attacked by a fraudster, there are fewer chances that the attack will cause you losses in all the retirement accounts. Any intelligent person would not be using the same password for both or multiple accounts.

More investment-Different retirement accounts ensure that you invest with more than one manager. It has its pros and cons. Looking at the brighter side, one can say that you get to explore much more than you usually would have planned. 

However, many people do not want to get into so much complexity. The often consolidate their accounts to make things simpler. Let’s look at a few drawbacks of opening multiple retirement accounts:

Expensive- Every account will have its fees that need to be paid diligently. In the end, it is often found that this fee turns out to be huge money.

Confusion- The process becomes much more complicated when it comes to managing multiple accounts and the issues related to them. It is the reason why some people believe “The lesser, the better.”

Tracking-Multiple retirement accounts also create a problem with monitoring of your savings at a given point in time.

How does it work?

You are given n option by your broker to open more than one retirement account. The set up of any new accounts involve a fee that they are going to charge from the individual. After the accounts are created, there are no more charges that you should have to bear except the investment. The yearly contribution has a limit beyond which you cannot possibly contribute. So, it is essential to note that if you are younger than 50 years, your deadline is $5500, and if you are older than 50, your limit is $6500. A minimum balance is recommended to be maintained by the broker. Even though having multiple accounts won’t let you cross the annual threshold, the benefits are worth noting. One must contribute in a way that he or she can manage everything without much complexity. There is a lot involved in the entire process. It includes the fee, so it is better to open as many accounts as you can handle without complications or it might not be fruitful for you.


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