Ask Terry Questions single brokerage firm or two?

single brokerage firm or two?

By Terry Savage on December 21, 2023 | Financial Planning / Retirement

Hi Terry, i am retiring soon and want to move my 401k account to an IRA account. i currently have an account at Charles Schwab, but i am thinking of setting up an account with either Fidelity or Vanguard for the new IRA. Do you have any thoughts on this? “Keeping all your eggs in one basket?” let’s assume the Schwab and the proposed new account would have approx 750K in each. I know FDIC insurance doesnt enter into this as most of the accounts are in stock or bond funds. (But i do have funds in my Treasury Direct account, thanks to you!!!) your thoughts would be appreciated. When RMD time comes I’m thinking it would be very straightforward to determine the amount needed to come out of the IRA.

Terry Says

Well, there’s a bunch of misinformation in your question. Brokerage accounts are guaranteed against loss by fraud by SIPC — the Securities Investor Protection Corporation — up to $500,000.
And if you have regular accounts and IRAs, or Regular IRAs and Roths, they are insured separately: If you have a Roth IRA and a traditional IRA at the same institution, SIPC protection treats them as separately insured accounts and provides a total of up to $1 million in protection, or $500,000 on the Roth account and $500,000 for the regular IRA.

And it’s no easier to have your money all in one firm than to have it in several financial firms. In fact, you might enjoy reading different research reports, which many custodians send out to IRA holders.
When it comes to RMDs, you just need to total the value of ALL your traditional IRAs, and you can take your distribution from just one, or several accounts. As long as you take the overall correct amount, you’ll be find.

You might want to read this recent column on Rollovers.

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