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Managing Multiple IRAs: Pros, Cons, and Best Practices

How Many IRAs Can You Have?

You can have multiple IRAs if you choose. As long as you stay within IRS eligibility guidelines and contribution limits, you can open and fund as many IRAs as you’d like. This can be beneficial if you’re thinking of opening a Roth IRA to complement your traditional 401(k) plan at work, or considering an IRA CD to take advantage of high interest rates and supplement your current IRA. Multiple IRAs can help diversify your tax strategy and your investment portfolio.

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:

• More tax benefits to choose from during your working years.
• More distribution choices when you retire.
• Potential to contribute more through SEP IRA, SIMPLE IRA, or spousal IRA.
• Diversification of investments.

Cons of Multiple IRAs

Maintaining multiple IRAs can also have its downsides:

• More accounts to manage.
• Harder to measure portfolio-wide performance or track goals.
• Potential for multiple fees.

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 where possible.
• Choose a single provider.
• Create a centralized system.
• Think of the big picture.

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.

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