How Many IRAs Can You Have?

There’s no limit to the number of IRAs you can have. However, there may be a limit to how many IRAs you need, or how many you can effectively manage. Also, you must follow IRS annual contribution limits, which generally apply across all the IRA accounts you hold.

Pros and Cons of Having Multiple IRAs

Pros of Multiple IRAs

Having more than one IRA—and particularly more than one type of IRA—may offer you more flexibility than having only one type of account. Here are a few of the potential benefits:

• Tax Benefits: You’ll have more than one tax benefit to choose from during your working years. You can decide, year by year, whether you’re better off maximizing your tax deductions with a traditional IRA or reaping greater tax savings in retirement with a Roth.
• Distribution Choices: You’ll have more distribution choices when you retire. Once you retire, the money you withdraw from your traditional IRA is taxed as regular income. Qualified distributions from a Roth are tax-free. Having both types of accounts can help you approach your taxes strategically in retirement.
• Increased Contributions: Though you can’t contribute more than $7,000 (or $8,000 if you’re 50-plus) to your traditional and Roth IRA accounts in total, you may be able to use a SEP IRA, SIMPLE IRA or spousal IRA to contribute beyond the $7,000 limit.
• Diversified Investments: A new IRA may give you the chance to try out a different provider or investing approach, or branch out into something like an IRA CD at your bank.

Cons of Multiple IRAs

Because your time and attention are finite, multiple accounts also have their downsides. Here are a few drawbacks to think through:

• Management Complexity: More accounts may mean more provider websites to visit, more tax forms to collect and file, more account balances to add up.
• Performance Tracking: The more accounts you have, the more work it takes to measure portfolio-wide performance or track goals.
• Multiple Fees: IRAs usually have annual account fees, which can multiply as your accounts multiply. Multiple fees cut into your returns, often without providing any clear benefit.

How to Effectively Manage Multiple IRAs

Maintaining multiple IRAs without losing track of your goals is easier if you can streamline and centralize control. Here are a few suggestions for managing multiple IRAs effectively:

• Roll Over Accounts: If you have multiple IRAs of the same type, you can typically roll them over into a single account. Be sure to follow IRS rollover guidelines to avoid penalties for early withdrawal.
• Choose a Single Provider: Many IRA providers offer multiple types of accounts, so you can keep different types of IRAs with the same company. Consolidating providers means you’ll find all of your statements, transaction records and tax forms in one place.
• Create a Centralized System: Whether you use your provider’s website or choose financial software to manage it all, find a way to track all of your IRA accounts efficiently.
• Think of the Big Picture: The primary benefit of having multiple IRAs is flexibility. But flexibility is only helpful when you use it to meet your overall objectives. Getting help from a tax advisor or financial planner may help you fine-tune your strategy now and bring your goals into focus for the long term.

The Bottom Line

You can have multiple IRAs, but you may or may not need them. Ideally, additional IRAs should offer tax benefits or unique investments you don’t already have. Having multiple IRAs should factor into your larger retirement plan and tax strategy. If multiple accounts are simply duplicates of one another, you may be better off streamlining.

Contact O1ne Mortgage for Your Mortgage Needs

At O1ne Mortgage, we understand the importance of making informed financial decisions. Whether you’re looking to diversify your retirement accounts or need expert advice on mortgage services, we’re here to help. Call us today at 213-732-3074 for personalized assistance and to learn more about how we can support your financial goals.