What are the drawbacks of multiple IRAs?
The main drawback of multiple IRAs? The hassle factor. Here are some of the hurdles to consider:
Double (or quintuple) the paperwork: Red tape comes with the retirement account territory. Although it’s easier than ever to track and manage your money online, multiple accounts means dealing with multiple tax forms, notices of service changes/updates, privacy policies and other disclosures
More complicated retirement planning and portfolio maintenance: Asset allocation, the art of finding the right balance between risk and reward in your portfolio, is a key part of retirement planning. When your assets are spread across multiple accounts, monitoring performance and rebalancing the overall mix to maintain a coherent investment strategy is more involved
Added exposure to account and investment fees: It’s natural to pay the most attention to higher-balance accounts and let the smaller ones ride. But neglecting care and maintenance on any retirement savings account can lead to subpar investment returns, especially when it comes to investment fees — everything from brokerage fees to mutual fund sales loads — that erode your earning power over time.