Can You Have an IRA at Two Institutions?
You can establish individual retirement accounts (IRAs) at more than one financial institution. IRA custodians offer varying types of investments and services as well as fees and commissions. Deciding whether to establish IRA accounts at more than one bank or brokerage company depends on your financial situation, tax status and what the money will be used for.
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Limits
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If you decide to open an account at more than one financial institution, organization is a must to avoid penalties from the Internal Revenue Service (IRS). You'll have more than one account and institution to keep track of. The contribution limits are an aggregate for all your IRA accounts. As of 2011, you may contribute up to $5,000 per year to IRAs if you are younger than 50 years old or $6,000 if you are over 50. The specific contribution amount depends on your adjusted gross income.
Institutions
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A good reason to split up your IRAs at different banks or brokerage companies is that certain investments can be held in specific institutions. If you want a certificate of deposit (CD) or savings account, then you can go to a bank. Annuities are held by insurance companies. Stocks, mutual funds, exchange traded funds (ETFs) and alternative investments can be purchased at brokerage firms. Some banks have separate broker-dealer operations. Once you know what type of investments to go into, you can narrow your choices of institutions.
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Transfers
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If you are transferring money from your current IRA custodian to a new one, fill out the transfer forms from both institutions and make a copy of your most recent statement from your current bank or brokerage company. Fax or mail the paperwork to your new IRA custodian. IRA transfers generally take about three weeks.
Distributions
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Traditional IRAs have a required minimum distribution when you turn 70 1/2 years old. If you split up your IRAs with several institutions, you don't have to take distributions from all of them. You may take the money out of the accounts you choose. A Roth IRA doesn't have a required minimum distribution.
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References
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