Combine IRAs with same custodian
I set up over 10 years ago a rollover IRA (current balance ~$200K) for my wife which contains before-tax monies from previous employers qualified plans. Several years ago, I set up a second traditional IRA (current balance ~$40K) for my non-working spouse which contains after-tax contributions (current basis, including 2019 contribution, is $33K) and the earnings on those contributions. Both IRA’s are with the same custodian and I want to know if there is any benefit to consolidating into a single IRA?
Permalink Submitted by Alan - IRA critic on Mon, 2019-12-30 19:35
These two accounts are treated as one combined TIRA for tax purposes, and that 33k of basis actually floats over both accounts. Therefore, there is no difference in tax issues either way. The benefit of combining is simplicity and less paperwork. And since IL provides good IRA creditor protection, she does not need to maintain a separate rollover IRA for creditor protection purposes. However, if you plan to move to CA anytime, that changes things regarding creditor protection.