There's no limit to the number of individual retirement accounts (IRAs) you can own. No matter how many accounts you have, though, your total contributions for 2021 can't exceed the annual limit of $6,000, or $7,000 for people age 50 or older.
Should I have multiple IRAs?
Here are a few reasons why that might not make sense. Planning for retirement is challenging enough without having to review performance across a broad range of accounts, and keeping multiple IRAs open can make it harder to maintain an asset allocation that's aligned with your goals.
Keep in mind that your IRA assets are there to help satisfy multiple needs when you retire, such as:
- Steady income
- Long-term growth
- Tax efficiency
- Wealth transfer
"Unless it's been rebalanced recently, your retirement plan or IRA rollover from a job you left five years ago may not reflect your personal goals and risk tolerance anymore."
— Debra Greenberg, director, Retirement & Personal Wealth Solutions, Bank of America
If you're holding accounts in employer-sponsored retirement plans or IRAs from prior jobs, you have choices for what to do with those assets, including rolling them into an IRA.Footnote 1 Unless it's been rebalanced recently, your retirement plan or IRA rollover from a job you left five years ago may not reflect your personal goals and risk tolerance anymore. Consolidating some of these accounts can be an important first step to realigning with your goals.
Does it make sense to have both Roth and Traditional IRAs?
It may make sense to own multiple IRAs if each IRA has a different feature or advantage. Since Roth IRAs offer the potential for tax-free distributions, it may be a good idea to add money to a Roth account, if eligible, while you are in a lower tax bracket and think you may be in a higher one at retirement. Having a Traditional IRA may be better if you are in a higher tax bracket now and prefer to bring your current taxable income down. Be aware that if you participate in an employer-sponsored retirement plan, your eligibility to deduct contributions to a Traditional IRA is phased out, based on modified adjusted gross income (MAGI) ranges that are published annually and correspond to your federal tax filing status. If you are eligible for a Roth IRA, your annual contributions are made with after-tax dollars and are not tax-deductible. To be eligible to contribute to a Roth IRA, your MAGI must be below specified limits. To find out more, read
Merrill's Contribution Limits and Tax Reference Guide (PDF).
What about married couples? Does it make sense for them to have multiple IRAs?
Just as with single filers, married couples can have multiple IRAs — though jointly owned retirement accounts are not allowed. You can each contribute to your own IRA, or one spouse can contribute to both accounts. Married couples that file a joint return also can take advantage of a spousal IRA, which allows one spouse to contribute and reap the full benefits of an IRA despite having little or no taxable compensation, so long as the other spouse is working and has sufficient taxable compensation. If one spouse is contributing to both accounts, the total contributions generally can't exceed your joint taxable compensation or double the annual contribution limit on IRAs, whichever is less. For 2021, the top amount is $12,000 if both spouses are under age 50; $13,000 if only one spouse is under age 50 at any time during the year; or $14,000 if both spouses are age 50 or older at any time during the year.