I have several Simple IRAs with several different companies a few of which are not being contributed to actively. I recently received the advice that "as a rule" having a single account is better. However, one of the accounts has a significant penalty (5%) for closing the account early.
Is the benefit of having a single statement worth a 5% hit?
Are there other benefits of having one account besides a having a single statement?
When you say "closing the account early," is it because of a CD inside? Or will they charge a 5% fee to close before normal retirement age? This is a crazy fee. $5000 on a $100K balance (for example.) What kind of company is this with? I've never heard of a fee so high. No, the benefits are more for your own organizing, not much else.
If the number is greater than zero, it is too high. That said, brokers charge a nominal fee for an outgoing transfer, usually $50-150.
Usually if you have some sort of ridiculous fee, that means that you've been suckered into some sort of insurance/annuity product in your IRA account.
If that's what is going on, that sucks, but you're going to read your contract carefully and fully understand the rules associated with transferring the account or ending the annuity. It may be worth paying the 5% penalty, as the fees associated with these accounts are usually ridiculous. If you were sold a bill of goods and didn't understand what you were investing in, you should complain loudly and often -- that often results in fee waivers.
