What Are the Benefits of Multiple IRAs?

Having multiple IRA's can be a helpful strategy in your retirement planning.

An individual retirement account is a tax-advantaged savings account used for long-term investment. Although many investors need only one IRA, there are situations in which having more than one is desirable.

Simplified Beneficiary Distributions

Naming a different beneficiary for each individual IRA account simplifies the distribution process, as you can simply pay out the entire account to the individual beneficiary, rather than having to worry about share count calculations or the liquidation of indivisible assets.

Division of Investments

By having more than one IRA account, you can place different types of investments in each account. For instance, you can use one IRA for conservative long-term savings, and another for more aggressive growth strategies.

Diversified Custodial Risk

If you hold IRA's at different institutions, you are reducing the risk that you will be affected financial or ethical difficulties, such as a firm bankruptcy, at any one institution.

Enhanced Rollover Capabilities

The IRS allows you to rollover the assets in any IRA to another institution once per year. If you have more than one IRA, you have more than one rollover option each year.

Multiple Types of Accounts

If you have made both deductible and non-deductible contributions to your traditional IRA, you can divide those accounts into two, making your distribution calculations easier to compute. With two accounts you could also have both a Roth IRA and a traditional IRA.

References

• Cashmoneylife.com: How Many Retirement Accounts Can You Have?
• Home and Family Finance Resource Center: Design An IRA Strategy That's Right For You