Author Topic: Looking to consolidate investment's but unsure if it's needed.  (Read 146 times)

Late_Bloomer

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Looking to consolidate investment's but unsure if it's needed.
« on: February 08, 2019, 02:29:12 PM »
My spouse and I are index investors, and because of recent changes in employment, we have multiple accounts that we're not sure how to move forward with. I have a 401k I rolled into an IRA with Vanguard a while back when I resigned from my employer. This account is 100% VTSAX. Similarly, my spouse rolled her 401k into a Vanguard IRA as well, also 100% in VTSAX. It's just coincidence that we both changed jobs around the same time. Her new employer offered a 401k with matching benefits that has Vanguard funds so we began bi monthly contributions. My new employer offers a 401k but does not have any matching component. It doesn't offer Vanguard funds but does offer a comparable index option. We don't have enough savings income to annually max all 4 accounts so we need to consolidate the accounts, or the contributions.

I believe we'd get the most benefit in moving both IRA's back into our respective 401k's and contribute to them to reach the yearly maximum, and of course get the tax advantage benefits that come with a 401k. Or, we could leave the IRA's with their respective balances in Vanguard, while continuing to contribute the yearly maximum to our 401k's. Would consolidating the IRA's into the 401k's be beneficial from a compounding stand point? If I'm not mistaken, the more you have accumulated in an account, the faster it will compound. The IRA's have 90k and 60k. The 401k's are new, so my wife's has a couple thousand in it, and mine hasn't been initiated yet. If we left the IRA's alone, and focused on the 401k's, would the IRA's suffer in the long run from not getting additional contributions?

I hope my inquiry makes sense, but it essentially breaks down like this:

IRA...60k
IRA...90k
401k...2k
401k...?

option 1: consolidate IRA's into the 401k's (and contribute to reach annual maximum). 
option 2: Keep all four accounts, but can only contribute to the two 401k's (leaving the IRA's stagnant).

Rob_bob

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Re: Looking to consolidate investment's but unsure if it's needed.
« Reply #1 on: February 08, 2019, 03:12:01 PM »
No, consolidating to have a larger balance doesn't compound faster, assuming the AA in each is the same.

The advantage of the IRA over the 401k is you will have more investment choices, or lower ER choices.

Contribute the max amount to both the 401k and the IRA's.