Can You Have Multiple Roth IRAs?

A Roth IRA is one of the most flexible, tax-advantaged retirement investing products. The key to a Roth IRA is that your contributions are tax-free and can be withdrawn tax-free starting at age 59½ provided certain conditions are met. Given the benefits of these accounts, you may find yourself investing in multiple Roth IRAs for access to different investment options or tailoring strategies to different goals. And best of all – the IRS does not place limits on the number of Roth IRAs you can open. Continue reading for key details you should know about having more than one of these accounts.

What Is a Roth IRA?

A Roth IRA is one of the most common tax-advantaged retirement account types. It is funded with post-tax dollars and unlike a traditional IRA, your contributions are not tax deductible, but you can start withdrawing funds starting at age 59½ tax-free (as long as you’ve had the account for five years or longer). Additionally, Roth IRAs do not require minimum distributions because your contribution dollars have already been taxed.

Having Multiple Roth IRAs

Per the IRS, it is perfectly legal to have multiple Roth IRAs. However, it’s important to note that doing so does not increase your overall contribution limit – it just spreads the same limit across all accounts.

• In 2024, you can contribute a maximum of $7,000 if you’re under 50 and $8,000 if you’re over 50.
• Contribution limits for 2025 remain the same.

So, say in 2024 you’ve contributed $3,000 to a traditional IRA, $2,000 to a Roth IRA, and $2,000 to another Roth IRA. In this case, you’ve reached your annual contribution limit of $7,000.

Benefits of Multiple Roth IRAs

You may consider having multiple IRAs for a variety of reasons, including access to more diverse investments and the potential to decrease your withdrawal tax exposure.

• Diversifying your investment portfolio: Let’s say you’d like the ability to handpick some of your retirement investments, and let some other investments be passively managed as part of an ETF. You can open one self-directed Roth IRA through a company that offers investments in alternative assets, and a regular Roth IRA at a traditional brokerage.
• Limiting tax exposure: Qualified withdrawals on Roth IRAs are tax-free, so having multiple accounts can allow you to manage retirement funds without triggering unexpected tax consequences.
• Withdrawal flexibility: Roth IRAs are more flexible than traditional IRAs in that your contributions can be withdrawn tax-free and without penalties at any time after age 59½. In addition, Roth IRAs are not subjected to required minimum distribution rules so Roth owners are not required to take distributions at age 73 like a traditional IRA does.
• Simplifying estate planning: For many people, their retirement accounts represent the majority of their life savings. Unlike with traditional IRAs, there is no requirement that you take distributions during your lifetime. Therefore, opening multiple Roth IRAs can help set up your beneficiaries for success as you can name multiple beneficiaries on the same account, or different beneficiaries for separate accounts.

Considerations for More than One Roth IRA

Opening multiple Roth IRAs requires savvy management of your retirement portfolio, including staying aware and abreast of contribution limits. Accidentally contributing too much to your accounts can trigger IRS penalties of 6% on the extra amount contributed. Tax forms will also need to be submitted for every account, so be sure that you are working with a trusted custodian like Forge Trust with verified experience in managing multiple Roth IRAs.

Contact us if you have any questions for our dedicated account service team or would like to start working with Forge Trust today.