How would you go about cleaning up an old traditional IRA?

I discuss the Backdoor Roth IRA here:

I discuss the Basis Isolation Backdoor Roth IRA, which comes into play if one has basis in their traditional IRA(s) here:

At 04:52 when I say “any asset will do” I should have said “any permissible asset will do” as IRAs can hold many, but not all, assets.

This video, the show notes, and any comments are for educational purposes only. They do not constitute tax, legal, financial, and/or investment advice for any person. Consult with your own advisors regarding your own matters….(read more)

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An individual retirement account (IRA) is a tax-advantaged savings account that allows you to save money for retirement. One type of IRA is a traditional IRA, which offers tax-deferred growth on your investments. However, as with any retirement account, it’s important to periodically review and clean up your old traditional IRA to ensure that it aligns with your current financial goals and retirement timeline.

Cleaning up an old traditional IRA can involve several steps, including consolidating multiple accounts, reviewing and adjusting your investment strategy, and updating your beneficiary designations. Here are some tips for cleaning up an old traditional IRA.

1. Consolidate Multiple Accounts: If you have multiple traditional IRAs from various jobs or financial institutions, consider consolidating them into one account. This can make it easier to manage your investments and reduce paperwork. You can do this by transferring your funds from one IRA to another through a trustee-to-trustee transfer or a direct rollover.

2. Review and Adjust Your Investment Strategy: It’s important to regularly review your investment allocations in your traditional IRA to ensure they align with your risk tolerance and retirement goals. Consider diversifying your investments across different asset classes to reduce risk and maximize returns. If you’re nearing retirement, you may want to shift your investments to more conservative options to preserve your savings.

3. Update Beneficiary Designations: Review and update the beneficiary designations on your traditional IRA to ensure that your assets will be distributed according to your wishes in the event of your passing. It’s important to keep these designations current, especially if your life circumstances have changed, such as marriage, divorce, or the birth of children.

4. Consider Converting to a Roth IRA: Depending on your financial situation and tax goals, you may want to consider converting your traditional IRA to a Roth IRA. A Roth IRA offers tax-free withdrawals in retirement, as opposed to the tax-deferred growth of a traditional IRA. Keep in mind that you will have to pay taxes on the amount converted if you choose to go this route.

5. Seek Professional Advice: If you’re unsure about how to clean up your old traditional IRA or need help with the process, consider seeking the advice of a financial advisor or tax professional. They can help you review your investments, assess your retirement goals, and make recommendations for optimizing your retirement savings.

In conclusion, cleaning up an old traditional IRA is an important part of retirement planning. By consolidating accounts, reviewing your investments, updating beneficiary designations, and seeking professional advice, you can ensure that your traditional IRA is aligned with your current financial goals and will provide a secure retirement.