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Using a Rollover IRA to Consolidate Multiple Retirement Assets

Taken together, the assets accumulated in employer-sponsored retirement savings programs -- such as 401(k)s, 403(b)s, and 457s -- are likely to represent the largest portion of your retirement nest egg. In order to assure yourself that you’ll get the greatest possible benefit from those assets when you retire, you’ll want to manage them efficiently during your working life. Since you are likely to change jobs many times throughout your career, you could end up with many overlapping investment portfolios rather than one well-balanced master plan. This small and scattered approach increases the potential for asset leakage and ineffective portfolio management, which can cut into the eventual value of your holdings. It may also set the stage for untimely tax burdens and increased investment management costs, which can reduce your effective long-term rate of return even further.

A flexible option for those seeking to accumulate assets under a single account umbrella is the rollover IRA. Offered by many financial institutions, the rollover IRA can help you turn a hodgepodge of holdings into a single investment blueprint and unified asset allocation plan. It can also allow you to exploit special tax benefits for certain types of company stock-based plan contributions and for in-kind distributions of certain assets.

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