Q.: I'm 72 and will soon take my first Required Minimum Distribution. I have seven retirement accounts. A friend suggested I consolidate them. What is your take? P.S.

A.: I agree with your friend. Consolidation is in order. Having multiple retirement accounts is an unnecessary clerical chore and simply becomes quite unmanageable at older ages. It becomes particularly nerve-racking when you have to calculate RMDs where a simple arithmetic error can be quite costly. Remember, under-reporting an RMD may lead to a penalty tax of 50 percent.

Q.: My grandson is 23. He is in the residential landscaping business and is becoming quite successful at it. When should he begin saving for retirement? G.K.

A.: Now, at age 23. For starters, he should contribute the maximum each year to a Roth IRA. When the friendly securities broker comes knocking, he should tell him or her that he uses the Vanguard Group of Mutual Funds, a very low-cost financial services firm. As his business grows, he should think of starting a 401(k) plan with a Roth feature. The formation of a 401(k) plan compels him to include his employees. At the appropriate time he should make matching contributions—a great employee benefit. 

Tip: While in good health, buy more term life insurance than you need. Why? You never know when you will need it, and you can always decrease it, while you will have to pass a physical to increase it.

Mr. Frank is a fee-only Retirement Financial Planner and a retired city high school Teacher of Accounting. He can be reached by phone at (732) 536-9472, or via email at rollover@optonline.net.

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