How Many Roth IRAs Can I Have? Save Money & Everything You Need to Know!

Working is one of those things that affect most people in the same way. No matter who you are and how you feel about doing it: work is the great equalizer. However, if talking honestly about it, most people can’t wait to retire and be able to start those projects that their work might have forced them to postpone. How many Roth IRAs can I have?

When it comes to making this dream a reality, a Roth IRA is one of the most popular tools at your disposal.

If you are reading this, chances are that you are already familiar with what a Roth IRA is and are only interested in knowing if there are limits on how many Roth IRAs can I have you can have. However, as with every type of investment tool, there are many more factors that you should consider.

For this reason, if you want to know if having one or many Roth IRAs is in your best interest, keep reading. Otherwise, let us give you the quick answer to the question “How many Roth IRAs can I have”: As many as you want. That being said, let’s take a look at the longer answer to that question.

Are There Limits to How Many IRAs Can You Have?

We already stated that there is no limit to the number of IRAs you can have at any given time. As long as you fulfill the requirements established to open a Roth IRA, you will be able to open as many as you want, as allowed by your financial institution. However, there are certain limitations in regard to your contributions.

As Roth IRAs allow their owner to enjoy several taxation benefits, it is not surprising that the government has restrictions in place. 

Of these, the most important to keep in mind are the contribution limit which, as of 2022, is $6000 per year, with an additional $1000 if you are over 50 years old. Now, this contribution limit applies to you as an individual instead of to each of your Roth IRA accounts, meaning that the limit is shared between all of them.

What this means in practice is that if you had 3 Roth IRA accounts, you would still be limited to contributing $6000 this year if under 50. You could, for example, deposit $2000 in each account, $6000 in one, $3000 in two, or any other combination that works for you. These same restrictions also apply to spousal contributions and other types of IRA.

I’m Lost; what Is a Roth IRA?

If any of the previously provided information confuses you, we recommend you inform yourself about what Roth IRAs are and how they work. The good news is that we can help you with that right here and right now. Let’s start with the basics: What is a Roth IRA?

IRA stands for “Individual Retirement Account,” a special type of savings account meant to help people retire when they come of age. Unlike traditional savings accounts, IRAs offer tax benefits meant to act as an incentive for their holders to save for retirement. Roth IRAs are one of the types of IRAs.

Roth IRAs stand out from other types of IRAs for not providing you tax benefits at the time of a deposit. 

However, any profit you make from interest on your contribution will be free of taxes if you retire the money once you are at least 59 years old. In addition to this, Roth IRAs allow you to take your money out at any given time if you really need to, all free of taxes or penalties as long as you don’t withdraw more than you originally contributed.

As previously stated, there is an annual limit on how much you can contribute to a Roth IRA. That limit is $6000 as of 2022 but will increase to $6500 in 2023.

Who Can Open a Roth IRA?

Technically, anyone who earns income within an income range is able to open a Roth IRA. This means that those who earn too much or too little can’t effectively open a Roth IRA or contribute to one, with only one exception we will talk about later on. 

To qualify for a full contribution Roth IRA, your MAGI (modified adjusted gross income) for a given tax year must be less than $129k as of 2022. This will be increased to $138k in 2023.

If you earn income over that limit, you might still be able to open and contribute to a Roth IRA, but your contribution limits will start to get lower. If you earn more than $144k ($153k in 20223), you won’t be eligible to contribute to a Roth IRA.

Now, as we mentioned before, there is an important exception: spouses. If your legal spouse file a joint tax return with you and one of you is eligible to make contributions while the other doesn’t make enough, then the eligible partner can contribute for both.

In this case, the MAGI for the eligible partner has to be under $218k to qualify for full contributions and between $218k and $228k with reduced contributions. You should keep in mind that in this case, both spouses would have their own separate Roth IRA(s), with one of them contributing to the other’s account.

As these numbers change every year, we recommend that you always check the latest information on the IRS’ website.

Why Would You Open More Than One Roth IRA?

You might now be wondering why someone would want to have more than one Roth IRA. The answer to this question is simple: Not all Roth IRA accounts are made equally. Interest rates, penalties, and other conditions will vary depending on the institution you choose to open your Roth IRA. 

By opening different accounts, you can benefit from different conditions at different institutions. Most Roth IRAs generate interest by investing your money on your behalf in the stock market, bonds, ETFs, mutual funds, and more. 

As such, you will always have a chance to decide how your money is invested depending on your risk tolerance. This means that opening multiple Roth IRAs can be a way of diversifying your investments and reducing risks in the process.

As you can also mix Roth IRAs with other types of IRAs, you can also diversify your taxation depending on the point of life when you are contributing. Need an immediate tax deduction? Contribute to a traditional IRA. Want to save in taxes in the long term? 

Contribute to your IRA. Need both benefits? Use both IRAs for this tax year’s contribution!

Another reason you might consider opening multiple Roth IRAs is to take advantage of different investment options. Different financial institutions may offer a wider range of investment options, such as a larger selection of mutual funds or lower fees for trading. By opening multiple accounts, you may be able to access a greater range of investment options and potentially increase your chances of earning a positive return.

It’s important to remember that there are limits on how much you can contribute to a Roth IRA each year. As of 2021, the maximum annual contribution limit is $6,000 for those under the age of 50, or $7,000 for those 50 and over. If you open multiple Roth IRAs, you must ensure that you do not exceed these annual contribution limits across all of your accounts.

In summary, there are several reasons why you might consider opening multiple Roth IRAs. These include taking advantage of different interest rates and other account conditions, diversifying your investments, and accessing a wider range of investment options. It’s important to keep in mind that annual contribution limits exist when opening multiple accounts.

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