How Many IRA Accounts Can a Person Have?

Individual Retirement Arrangements (IRAs) are valuable tools for saving for retirement with tax advantages. These accounts offer a flexible way to build a nest egg, often complementing workplace plans. While many understand the general concept, questions often arise regarding the number of IRAs an individual can maintain. Understanding these rules and how they apply to multiple IRAs can help optimize retirement savings strategies.

Understanding Multiple IRA Accounts

There is no federal limit to the number of Individual Retirement Arrangement accounts a person can establish or hold. This flexibility allows savers to manage their retirement investments across different platforms or with diverse strategies.

People often hold multiple IRAs for various reasons. One common scenario involves having accounts at different financial institutions, which can provide access to a wider range of investment options or different fee structures. Another reason might be to separate investment strategies, such as having one IRA focused on long-term growth and another on more conservative investments. Individuals might also acquire multiple IRAs through rollovers from previous employer-sponsored plans like 401(k)s, or through inheriting an IRA. While the number of accounts is unlimited, total annual contributions to certain types of IRAs are subject to specific Internal Revenue Service (IRS) limits, which apply across all accounts.

Different Types of IRAs and Contribution Rules

The rules for contributing to IRAs vary significantly depending on the type of account. For contributory IRAs, specifically Traditional and Roth IRAs, the IRS sets a combined annual contribution limit. For 2025, an individual under age 50 can contribute a maximum of $7,000 across all Traditional and Roth IRAs they own. Those age 50 and older can contribute an additional $1,000, bringing their total annual limit to $8,000.

For example, if the limit is $7,000, a person could contribute $3,500 to a Traditional IRA and $3,500 to a Roth IRA, or any other combination, as long as the total does not exceed $7,000. It is the individual’s responsibility to track contributions across all their Traditional and Roth IRAs to ensure compliance with this aggregate limit.

Employer-sponsored IRAs, such as Simplified Employee Pension (SEP) IRAs and Savings Incentive Match Plan for Employees (SIMPLE) IRAs, operate under different contribution guidelines. Contributions to SEP IRAs are typically made by an employer on behalf of eligible employees, including self-employed individuals. For 2025, the maximum contribution to a SEP IRA is the lesser of 25% of an employee’s compensation or $70,000. These employer contributions do not count against an individual’s personal Traditional or Roth IRA contribution limit.

SIMPLE IRAs also involve employer contributions, but employees can also make salary deferral contributions. For 2025, employees can contribute up to $16,500 to a SIMPLE IRA. Individuals age 50 and older can make an additional catch-up contribution of $3,500, totaling $20,000.

Non-contributory IRAs, such as Rollover IRAs and Inherited IRAs, are not subject to annual contribution limits. A Rollover IRA is established when funds are transferred from a qualified retirement plan, like a 401(k), into an IRA. This process allows individuals to maintain the tax-deferred status of their retirement savings when changing jobs or upon retirement. Inherited IRAs are accounts received by a beneficiary after the death of the original account holder.

Aggregating Contributions Across Accounts

Managing contributions when an individual holds multiple IRAs requires careful attention to IRS regulations. This responsibility rests entirely with the individual taxpayer. Financial institutions typically report contributions made to accounts they hold, but they do not track contributions made to accounts at other institutions.

Contributing more than the allowable annual limit results in an excess contribution. Excess contributions are subject to a 6% excise tax per year for as long as the excess amount remains in the account. For instance, if an individual contributes $1,000 over the limit, they would owe a $60 penalty for that year. This penalty continues to apply each year until the excess is removed.

The most straightforward approach to correct an excess contribution is to withdraw the excess amount and any earnings attributable to it before the tax filing deadline, including extensions. If the excess is not removed by this deadline, it can still be withdrawn later, but the 6% penalty will apply for each year the excess was in the account. Another option is to apply the excess contribution towards the following year’s contribution limit, though the 6% penalty for the initial year will still apply.

Maintaining accurate records of all IRA contributions is important, especially when accounts are held at different financial institutions. The IRS requires financial institutions to report IRA contributions on Form 5498, “IRA Contribution Information.” While taxpayers do not file this form themselves, they receive a copy, and it is a valuable record for verifying contributions and ensuring compliance with IRS limits. For non-deductible Traditional IRA contributions, individuals must also track these amounts on IRS Form 8606, “Nondeductible IRAs,” to avoid being taxed on the same money twice upon withdrawal.