How Many IRA Accounts Can I Have?

An Individual Retirement Account (IRA) serves as a retirement savings vehicle, offering tax advantages to help individuals accumulate funds for their future. These accounts provide a flexible way to save, allowing for various investment choices and structures that can align with diverse financial goals. Many people begin their retirement planning by considering an IRA, often wondering about the rules governing how many accounts they can establish.

Understanding Different IRA Types

Individual Retirement Accounts come in several forms, each with distinct characteristics regarding contributions and tax treatment. A Traditional IRA allows for pre-tax contributions, which may be tax-deductible, leading to tax-deferred growth. Withdrawals in retirement from a Traditional IRA are taxed as ordinary income.

A Roth IRA is funded with after-tax contributions. It offers tax-free growth and tax-free withdrawals in retirement, provided certain conditions are met, such as being age 59½ and having held the account for at least five years. Eligibility to contribute to a Roth IRA is subject to income limitations.

Simplified Employee Pension (SEP) IRAs are retirement plans for self-employed individuals or small business owners. Contributions to a SEP IRA are made by the employer, are tax-deductible for the employer, and grow tax-deferred for the employee. A Savings Incentive Match Plan for Employees (SIMPLE) IRA is another employer-sponsored retirement plan for small businesses with 100 or fewer employees. Both employee salary deferrals and employer contributions are permitted in a SIMPLE IRA, with contributions growing on a tax-deferred basis.

The Number of IRA Accounts You Can Have

There is no legal restriction on the number of Individual Retirement Accounts an individual can establish or hold. An individual can open multiple Traditional IRAs, multiple Roth IRAs, or a combination of both types. This flexibility allows for diverse financial planning and investment strategies.

Individuals might choose to maintain multiple IRA accounts for various reasons. These include separating different investment strategies, working with multiple financial institutions to diversify holdings, or holding both a Traditional IRA and a Roth IRA to benefit from different tax treatments.

Multiple accounts can also result from consolidating funds from previous employer-sponsored retirement plans. When rolling over old 401(k)s or other qualified plans, individuals may open separate IRAs for each rollover to keep funds distinct. While the number of accounts is unlimited, annual contribution limits still apply across all accounts.

Navigating Contribution Limits Across Accounts

While an individual can hold numerous IRA accounts, the IRS imposes a single, combined annual contribution limit across all Traditional and Roth IRAs. For 2025, this limit is $7,000. Individuals age 50 and over can make an additional “catch-up” contribution of $1,000, bringing their total to $8,000. These limits apply per individual, not per account.

Exceeding these combined contribution limits can lead to penalties. The IRS levies a 6% excise tax annually on any excess contributions that remain in the IRA. This tax applies for each year the excess amount is not withdrawn. To avoid this penalty, excess contributions and any earnings should be removed by the tax filing deadline, including extensions.

Contributions to SEP IRAs and SIMPLE IRAs operate under separate, higher limits and do not count against the individual’s Traditional or Roth IRA contribution limit. For 2025, the maximum employer contribution to a SEP IRA is the lesser of 25% of the employee’s compensation or $70,000. For SIMPLE IRAs, employees can contribute up to $16,500 in 2025. Those age 50 and older can contribute an additional $3,500 as a catch-up contribution to a SIMPLE IRA, totaling $20,000.

Managing Multiple IRA Accounts

Managing multiple IRA accounts requires diligent record-keeping and an understanding of IRS regulations to ensure compliance and optimize tax benefits. Maintaining accurate records for all contributions, especially non-deductible Traditional IRA contributions, is important. These contributions establish a “basis” in the IRA, which is tax-free upon withdrawal.

When distributions are taken from IRAs with both pre-tax and after-tax amounts, the “pro-rata” rule applies. This rule dictates that any distribution comes proportionally from both taxable and non-taxable funds across all Traditional, SEP, and SIMPLE IRAs an individual holds. This aggregation rule prevents an individual from selectively withdrawing only the tax-free basis first. To track non-deductible contributions and calculate the taxable portion of distributions, individuals must file IRS Form 8606, “Nondeductible IRAs.”

Required Minimum Distributions (RMDs) are another consideration for individuals with multiple IRAs once they reach age 73. While RMDs must be calculated for each Traditional, SEP, and SIMPLE IRA separately, the total RMD amount can be withdrawn from any one or a combination of these accounts. This aggregation rule for RMDs simplifies the withdrawal process. Beneficiary designations should be consistent and up-to-date across all IRA accounts.