I am retired and my wife is retiring at the end of this month. should we combine our retirement funds with one administrator or keep them separate ? Also is there a penalty in doing so?
SAVAGE SAYS:I think you need to get some personal advice because there seems to be a big gap in your knowledge. Let me give you the basics. Your retirement accounts are INDIVIDUAL accounts. You can’t combine them!
Your wife will have the opportunity to do a DIRECT ROLLOVER of her company retirement plan to an IRA — to a place like Fidelity or Vanguard. Her employer should be helping in this process, as she should NOT TAKE A CHECK from her current plan, or she will owe taxes on the money! Instead, call Fidelity (1-800-FIDELITY) and let them handle the transfer into an IRA. They will also help her decide on a conservative investment program. And once she reaches age 70-1/2, they will help her take the required minimum distribution each year.
And since you are already retired, and don’t say your age, you need to remember to take those required distributions after age 70-1/2 as well. And there is no reason you can’t use the same “administrator” — ie Fidelity or Vanguard or T Rowe Price for your funds — but they will be kept as separate IRA accounts. What you do with the money AFTER you withdraw it is up to you! Then you can have a combined checking account if you want!
Of course, all of this is assuming that she has a 40l(k) plan — and is able to do the rollover. If she is getting a monthly pension check (rare these days), then she should just have it direct deposited into whatever checking account she wants to use.