The Advantages of Multiple IRA Accounts

by Mark Kennan

Individual retirement accounts allow you to save money for retirement and reap tax benefits while you do so. The Internal Revenue Service does not allow you to exceed the contribution limit even if you have multiple IRAs, but having several accounts does offer a variety of other benefits that make it worthwhile to fill out the extra paperwork.

Different Tax Attributes

You can open both a Roth IRA and a traditional IRA and split the tax benefits of the two different IRA types. Roth IRA contributions are after-tax but distributions are tax-free; conversely, traditional IRA contributions are tax-deductible but distributions are taxable. Therefore, if you aren't sure whether you will be in a higher income tax bracket at retirement than now, you can put half of your annual contribution in a traditional IRA and half in a Roth IRA. That way, you can deduct part of your contribution in the current year, and part of your distributions at retirement will be tax-free.

Different Financial Institutions

When you have multiple IRAs, even if they are the same category of IRA, you can diversify your investments with different financial institutions. For example, if you prefer the investment philosophy of the international growth stock fund at financial institution A, but the best blue chip fund is at financial institution B, you could open an IRA at each institution to take advantage of the different fund managers. If you only have one IRA, you would have to choose a single financial institution with which to invest all of your retirement money.

Rollover Capabilities

IRS rules state that if you roll over any part of one IRA to another, you cannot roll over any part of either account within the next 12 months. For example, if you rolled money from your first IRA into your second IRA, you could not roll over money from either of those accounts for 12 months. If those are your only two IRA accounts, you could not perform another rollover. However, if you had another IRA, you could use that account to roll over money if the need arose. For this reason, it is sometimes a good idea to roll your first IRA into a new IRA and leave your second IRA untouched.


For each IRA that you have, you must name a beneficiary or beneficiaries. When you have multiple IRAs, you can name a separate beneficiary for each one to avoid disputes after your death. For example, you could leave the entirety of your first IRA to your son and the entirety of your second IRA to your daughter, rather than having one IRA split among them both. In addition, if you elect to take substantially equal payments for yourself from one IRA to avoid the early withdrawal penalty, that election only applies to that one IRA.

About the Author

Mark Kennan is a writer based in the Kansas City area, specializing in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."

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