How to Have Multiple IRA Accounts

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IRAs, or Individual Retirement Accounts, are a tax-advantaged way to save or invest for retirement. There are several types of IRAs, including traditional IRAs and Roth IRAs. You may want to have multiple IRA accounts because of changing tax needs, or because you want or need an IRA account at more than one company. There is no limit to the number of IRA accounts you can have. However, the total amount you can contribute to all your IRA accounts must not exceed your contribution limit. If you have multiple IRA accounts, you’ll need to stay organized to make sure you’re meeting all the rules. You can track your IRA contributions in a spreadsheet or financial software, or with just a piece of paper and a pen.

Managing Multiple IRA Accounts

Decide between a traditional and a Roth IRA. If you opened a traditional IRA earlier and now you want a Roth (or vice versa), you can open a new IRA and keep the old one too. This might happen if your income level changes. For example, if you started a Roth IRA while you were in a low tax bracket and now you’re in a higher tax bracket, you might want to stop contributing to the Roth and start contributing to a traditional IRA.

Consider whether you need to open a new IRA account at a different company, even if you already have one. This might happen when you change jobs (and get different company-sponsored investment choices) or when you simply decide to choose a different investment firm, mutual fund company or stockbroker.

Consider whether you want to keep all of your IRA accounts open, or combine them. The conversions between traditional and Roth IRAs can be complicated, so you may just want to keep them in separate accounts. However, if you have an IRA from your old company and want to start a new one of the same type, you might want to rollover the assets from the old account after you establish the new one. This can save money on account fees and minimums, and make your contributions easier to keep track of.

Figure out how much you can contribute to your IRAs for the year. Remember that this amount applies to the total contributions for all your IRA accounts. (You can’t max out one and then max out another.)

Decide which accounts you want to contribute to. If you have an account from your old job and an account from your new job, this is an easy decision, since you’re probably only eligible to contribute to the new one. If you choose to have multiple accounts in different investments, decide how much you want to add to each one.

Record all your contributions in your investment tracking system. Record the date of the contribution, the amount and the tax year that it’s for.

Tips & Warnings

  • At most mutual fund companies, you don’t need to have separate IRA accounts to own more than one fund. Most companies allow you to own more than one fund within the same account.
  • SEP IRAs, SIMPLE IRAs and Educational IRAs are separate from traditional or Roth IRAs. Your contributions to traditional or Roth IRAs should not affect these types of accounts.
  • Be sure to consider tax consequences and account fees when making decisions about IRAs.

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