Can You Have More Than 1 Roth IRA?

There's no legal limit to the number of traditional or Roth individual retirement accounts you can open. There is usually a practical limit, however. You can only donate so much to your IRAs each year: Opening 100 Roth accounts doesn't let you save more money than if you had just one.

Maximum Contributions

At time of writing the maximum you can contribute to a Roth or traditional IRA is $5,500 a year, or $6,500 if you're older than 49. That's not per account; it's the total you can contribute to all your IRA accounts combined.

If your earned compensation for the year is lower than $5,500, you can't contribute more than your compensation. The IRS defines compensation to include:

•Wages, salaries and bonuses

•Commission pay

•Self-employment income

•Alimony and separate maintenance

Tip

If your spouse doesn't have enough income to contribute the maximum to a Roth, you can do it in her place. If she only makes $2,000 in self-employment income, you can contribute $5,500 to your account and another $3,500 to her Roth. The Internal Revenue Service discusses income limits and other restrictions on funding spousal IRAs in Publication 590.

Other income -- such as rent, dividends, interest and money excluded from taxes -- doesn't count as compensation.

Roth IRAs are subject to an income restriction that doesn't affect traditional IRAs. If your modified adjusted gross income is $183,000 or more, as of 2015, and if you file a joint return, you get a smaller Roth contribution limit. At $193,000 modified adjusted gross income, or MAGI, you can't contribute at all.

Tip

To calculate your MAGI, you first figure your adjusted gross income on the front of your tax return. Then you add any deductions you took for IRA contributions, tuition and fees, student loan interest and other write-offs. Publication 590 has the worksheet for crunching the numbers.

If your income is too high to contribute to a Roth, you can still contribute to a traditional IRA and then roll the money over into a Roth account. You pay tax on the rollover, but the withdrawals from the Roth are tax free in retirement.

Multiple Accounts

IRAs aren't free. You have to set your account up with a custodial firm that invests the money and keeps the records. The site Financial Web says fees typically run between $20 and $50, though some firms also charge fees based on the size of the account. Other companies specialize in offering reduced fees to attract customers, and some firms charge substantially higher fees.

If you place your money in five $1,100 Roth IRAs this year, you have to pay five times the fees you would with one account. The Vanguard Group says having one account reduces the amount of paperwork you have to deal with, as all your investments are in one account.

references