Although this dilemma isn’t as life altering as Hamlet’s, it could still have a significant impact on your financial affairs. Here are several reasons to consider one path or the other.

When not to consolidate. While it’s generally possible to consolidate multiple traditional or Roth IRAs—that is, merging traditional IRAs with other traditional IRAs, or Roths with other Roths—you can’t put a traditional IRA with a Roth, and you can’t join an IRA with employer retirement plans such as 401(k)s or 403(b)s.

One reason not to consolidate accounts is that it may mean forfeiting favorable tax treatment. For example, although the law was recently revised to permit a non-spouse to roll over inherited retirement plan assets, those must remain in a separate inherited IRA. (You can, however, merge an IRA left by your spouse into your own account.) Or you may have assets in a “conduit IRA,” a special kind of account that holds money from a previous employer’s retirement plan until you can move it to a plan at your new job. To preserve the advantages of a 401(k) or 403(b)—for example, being able to tap the account at age 55 if you retire early, or getting better tax treatment for company stock—you must avoid mixing a conduit IRA with other accounts.

You may also not want to consolidate if the IRAs have been separated to accomplish specific planning goals involving beneficiary designations or to set up specific streams of income.

When to consolidate. If none of those reasons apply, bringing together two or more accounts may provide several benefits. Almost all of the advantages involve the fact that it’s much easier to manage one account than to keep track of several. Consider the following:

• Making changes in your investment strategy—say, moving to a more conservative mix of assets as you approach retirement—is significantly more complex and time-consuming if it involves several accounts.

• If you have many accounts, you may tend to ignore those that are small or aren’t performing well.

• If your IRAs are at several institutions, each one may charge you an annual maintenance fee. You’ll also have more paperwork, with multiple monthly statements and end-of-year tax forms.

• When it’s time to begin distributions from a traditional IRA—the year after you turn 70½—the amount of the required withdrawal is based on the total value of all IRAs. Neglect to include one in your calculations and you’ll face punishing tax penalties.

• Before consolidating IRAs, consider rolling over your 401(k) plan to an IRA so that you can “stretch” the IRA over a beneficiary’s life expectancy. If a 401(k) participant dies before doing this, beneficiaries are generally required to take a full distribution and pay income taxes on it within five years.

We can help you decide if you should consolidate your IRAs and consider how those assets fit into your overall financial plan.