There’s no limit on the number of IRAs you can have. You can also own multiple types of IRAs, like a traditional, a Roth, a SEP, etc. You can even own multiple IRAs of the same type at the same or different financial institutions.
A Nerd Wallet article simply asks, “Can You Have Multiple IRAs?” The article notes that increasing the number of IRAs you own doesn’t necessarily increase the amount you can contribute annually. Let’s look at the pros and cons of having multiple IRAs.
Having multiple IRAs can help you fine-tune your tax strategy and gain access to more investment choices and increased account insurance. Different types of IRAs give you different tax breaks. A traditional IRA gives you an immediate tax deduction, letting you delay what you owe the IRS, until you begin withdrawing your savings from the account in retirement. With a Roth IRA, there’s no upfront tax break on contributions, but qualified withdrawals are tax-free.
Having IRAs at multiple financial firms can give you a choice of different types of investments and even different investing strategies.
The main drawback of multiple IRAs is the hassle. Think about double (or quintuple) the paperwork. While it’s easier than ever to monitor and manage your money online, having multiple accounts means dealing with multiple tax forms, notices of service changes/updates, privacy policies and other disclosures.
When your assets are spread across multiple accounts, monitoring performance and rebalancing the overall mix to maintain a coherent investment strategy is more involved.
For most people, the right number of IRAs is at least two: a Roth and traditional IRA, in addition to a workplace retirement plan, if you’ve got one. The Roth IRA gives you the most flexibility both before you retire (tax- and penalty-free withdrawals of contributions) and in retirement (tax-free distributions and no required minimum withdrawals). If you qualify to contribute to a Roth IRA, it’s worth having one.
A traditional IRA is a wise choice for money from old workplace retirement plans, or if the upfront tax deduction incentivizes you to save more. You’ll likely get access to more investment options and more control over fees, as opposed to your old 401(k). Rolling the money from a plan funded by your pretax dollars into a traditional IRA, which treats taxes the same way, also ensures there aren’t any surprise bills from the IRS.
Reference: Nerd Wallet (February 26, 2019) “Can You Have Multiple IRAs?”