can you have multiple ira accounts

When you’re building your retirement savings, you might wonder about the best way to structure your accounts. Perhaps you’re interested in having a Roth IRA for tax-free growth while also maintaining a traditional IRA for its upfront tax deductions. This leads to a very common and practical question: can you have multiple ira accounts?

The Simple Answer to Managing Multiple IRAs

Yes, the IRS absolutely allows you to have more than one IRA. There is no limit to the number of individual retirement accounts you can open. You could have several traditional IRAs, several Roth IRAs, or a mix of both. This flexibility can be a powerful tool for organizing your investments or pursuing different strategies.

Why Would You Consider More Than One IRA?

There are several strategic reasons for having multiple accounts. Some investors use different IRAs to separate various types of investments, like keeping bonds in one and stocks in another for easier tracking. Others might open a new IRA at a different financial institution to access specific investment options, like a unique mutual fund or a self-directed IRA for alternative assets, while keeping their existing account open.

What You Need to Know About Contribution Limits

This is the most critical rule to remember. While you can have multiple IRAs, your annual contribution limit is a single, combined total across all of them. For 2024, the total you can contribute to all your IRAs is $7,000 (or $8,000 if you’re 50 or older). It doesn’t matter if you split that $7,000 between two accounts or put it all in one; you cannot exceed the overall limit. Staying within this total is essential to avoid IRS penalties.

Practical Tips for Managing Your IRAs

Before opening a new account, consider if the benefit outweighs the potential complexity. More accounts mean more statements to review and more logins to manage. It’s also wise to be mindful of fees; some providers charge annual account fees, which could be duplicated across multiple IRAs. For many people, consolidating accounts at a single provider can simplify management, but having a strategic reason for multiple IRAs can also be a valid approach.

Ultimately, having multiple IRAs is a perfectly legal and sometimes advantageous strategy. The key is to be clear about your reasons for doing so and, most importantly, to always keep a close eye on the combined annual contribution limits to ensure your retirement planning stays on a smooth and penalty-free path.