Can You Open More Than One IRA Account?

You can generally open more than one Individual Retirement Account (IRA). Understanding the specific rules and considerations that govern these accounts is important. Individuals often consider multiple IRAs to pursue different investment strategies or manage funds with varying tax treatments. This approach offers flexibility in retirement planning but introduces complexities regarding contribution limits and withdrawal regulations.

Understanding IRA Contribution Limits Across Accounts

When you have multiple IRAs, the Internal Revenue Service (IRS) imposes an annual contribution limit that applies across all your Traditional and Roth IRAs combined. For instance, in both 2024 and 2025, the total amount you can contribute to all your Traditional and Roth IRAs is $7,000 if you are under age 50, and $8,000 if you are age 50 or older. This means the total across both account types must not exceed the annual limit. Contributions exceeding these limits are considered “excess contributions” and are subject to a 6% excise tax annually until removed. To avoid this penalty, you must withdraw the excess contribution and any earnings by the tax filing deadline. The IRS provides guidance on these rules in Publication 590-A.

Different Types of IRAs and Multiple Accounts

Beyond Traditional and Roth IRAs, other types like Simplified Employee Pension (SEP) IRAs and Savings Incentive Match Plan for Employees (SIMPLE) IRAs operate under distinct contribution rules. These employer-sponsored plans have separate limits and do not count towards the combined Traditional and Roth IRA limits. For example, a self-employed individual might contribute to a SEP IRA and also maintain a Traditional or Roth IRA.

SEP IRA contributions, typically made by an employer, are significantly higher than personal IRA limits, reaching $69,000 in 2024 and $70,000 in 2025. SIMPLE IRAs, designed for small businesses, have employee contribution limits of $16,000 in 2024 and $16,500 in 2025, with an additional catch-up contribution for those age 50 or older. Participation in these plans does not prevent contributions to a Traditional or Roth IRA, provided eligibility requirements are met.

Managing and Consolidating Multiple IRAs

Managing several IRA accounts can present administrative challenges, including tracking performance, monitoring fees, and ensuring proper diversification. Each account may involve separate statements, login credentials, and investment choices, which can complicate oversight. Consolidating multiple IRAs into a single account can simplify record-keeping, provide a unified view of your portfolio, and potentially reduce administrative fees.

Consolidation can be achieved through a rollover, which involves moving funds from one retirement account to another. A direct rollover transfers funds directly between financial institutions, minimizing tax implications. An indirect rollover involves funds distributed to you first, with a 60-day window to deposit them into the new IRA. Reasons for consolidating include streamlining investment strategies, simplifying required minimum distributions (RMDs), and easing beneficiary management.

Withdrawal Rules for Multiple IRA Accounts

When taking distributions from multiple IRA accounts, specific tax rules apply. For Traditional IRAs, if you have made both deductible (pre-tax) and non-deductible (after-tax) contributions across your accounts, the IRS applies the “pro-rata” rule. This rule treats all your Traditional IRAs as a single account for tax purposes when you take a distribution. Consequently, each withdrawal consists of a proportionate mix of taxable and non-taxable amounts, based on the total pre-tax and after-tax basis across all your Traditional IRAs.

This calculation requires careful tracking of your non-deductible contributions using IRS Form 8606. Failure to file Form 8606 when making non-deductible contributions can result in the IRS assuming all distributions are fully taxable. For Roth IRAs, withdrawal rules follow an ordering system: contributions are withdrawn first, then converted amounts, and finally earnings. This ordering applies across all your Roth accounts, meaning qualified distributions of contributions are always tax-free and penalty-free. IRS Publication 590-B provides detailed information on IRA distributions.