Easy to Combine Two Roth IRA Accounts

Q: Dear Dr. Don,
I have two Roth IRA accounts. The first account I opened about five years ago, the second one about two years ago with Scottrade. Can I roll my first Roth IRA into my Scottrade Roth IRA account?
-- David Duo

A: Dear David,
Contributions to a Roth IRA are based on eligibility and annual contribution limits. Qualified contributions to a Roth IRA can be transferred to other Roth IRA accounts. The frequency of these transfers is limited, but consolidating your two Roth IRA accounts shouldn't be an issue.

See IRS Publication 590, Individual Retirement Arrangements, for the particulars on transfer limitations in the section "Can You Move Retirement Plan Assets?"

I like trustee-to-trustee (direct) transfers, even though there's no mandatory withholding issue on a Roth IRA or traditional IRA accounts. That's because you don't have to worry about the 60-day window to reinvest when you do a trustee-to-trustee transfer. Your local Scottrade office should be more than happy to help you with the transfer.

Too often, people get complacent about where they hold their retirement accounts. Employer plans don't typically offer a lot of choices, but IRA and Roth IRA accounts typically allow you to choose among banks, brokerages or investing directly with a mutual fund. You can vote with your feet if you want to change where the money is held.

To ask a question of Dr. Don, go to the "Ask the Experts" page, and select one of these topics: "financing a home," "saving & investing" or "money."

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