Can I Have More Than One IRA Account?

Yes, you can have more than one Individual Retirement Arrangement (IRA), as there is no limit on the number of accounts an individual can open. These accounts are savings plans with tax advantages designed to help individuals save for retirement. Holding multiple IRAs is a common strategy for organizing retirement assets and diversifying investments.

While you can open many accounts, specific rules from the Internal Revenue Service (IRS) govern how you contribute to, manage, and withdraw from them. These regulations apply to the individual saver, not to each separate account. Following these rules is necessary to use multiple IRAs effectively and avoid potential tax penalties.

Understanding IRA Contribution Limits

The primary rule for multiple IRAs is the annual contribution limit. This limit is an aggregate amount that applies across all of your Traditional and Roth IRAs combined. For 2025, the total amount you can contribute is $7,000, meaning your total contributions to all personal IRAs for the year cannot exceed this shared ceiling.

The IRS also allows for catch-up contributions. If you are age 50 or older, you can contribute an additional $1,000, bringing your total possible contribution for 2025 to $8,000. This extra amount is also part of the aggregate limit and must be allocated across all your Traditional and Roth IRAs.

These personal IRA limits are separate from those for employer-sponsored or self-employed retirement plans. Accounts like a SEP (Simplified Employee Pension) IRA or a SIMPLE (Savings Incentive Match Plan for Employees) IRA have their own, higher contribution limits. For example, the maximum contribution to a SEP IRA in 2025 is $70,000, and contributions to these plans do not count toward your personal Traditional and Roth IRA annual limit.

Combining Different Types of IRAs

A primary reason for holding multiple IRAs is to take advantage of different tax treatments, a strategy called tax diversification. The most common pairing is a Traditional IRA and a Roth IRA. Contributions to a Traditional IRA may be tax-deductible, lowering your taxable income in the present, while investments grow tax-deferred until withdrawals in retirement are taxed as ordinary income.

In contrast, a Roth IRA is funded with after-tax dollars, so there is no upfront tax deduction. The benefit is that both investment growth and qualified withdrawals in retirement are completely tax-free. By contributing to both types, you create flexibility for your retirement years, allowing you to draw from either taxable or tax-free sources depending on your financial situation.

Another frequent combination involves holding a personal IRA alongside a plan related to business ownership. A self-employed individual might contribute to a SEP IRA to maximize their retirement savings, while also contributing to a personal Roth IRA to build a source of tax-free retirement income. This allows them to leverage the high contribution limits of the SEP plan while still benefiting from the tax advantages of a Roth account.

Managing Withdrawals and Rollovers

Managing multiple IRAs requires attention to specific rules for withdrawals and rollovers. For Required Minimum Distributions (RMDs), which generally must begin after you reach a certain age, the rules offer flexibility. The RMD amount is calculated for each of your Traditional, SEP, and SIMPLE IRAs separately, but you can withdraw the aggregated total from just one of the accounts or any combination of them.

A more complex issue is the pro-rata rule, which applies when you perform a Roth conversion and have both pre-tax and post-tax money in your Traditional IRAs. The IRS views all of your Traditional, SEP, and SIMPLE IRAs as one single pool of money for this purpose. When you convert a portion to a Roth IRA, you cannot simply convert only the non-deductible (post-tax) contributions.

Instead, the conversion is treated as a proportional distribution of your pre-tax and post-tax funds from across all those accounts. A portion of the converted amount will be taxable, based on the ratio of pre-tax money to the total balance of all your aggregated IRAs. This rule prevents individuals from selectively converting only non-taxable funds.