Can You Have More Than One Roth IRA?

All right, let’s be honest personal finance can get complicated fast, and retirement planning is only one aspect. The question that we are going to answer in a moment is, can you have more than one Roth IRA? For those unfamiliar with what a Roth IRA is we’ll get more into details later, but essentially it is a retirement account that provides tax advantages. 

Can You Have More Than One Roth IRA?

The short answer is YES. You can have more than one Roth IRA. There is no limit on the number of Roth IRAs you have or the amount of Roth IRAs a married couple has. For example, an individual may have a Roth IRA at one brokerage and another Roth IRA at another brokerage. 

However, there is a lot more to it. Is there a benefit to having more than one? Why do people have more than one Roth IRA? Are there contribution limits?

If You Have More Than One Roth IRA, How Much Can You Contribute?

If you are new to retirement accounts, there are contribution limits. Because retirement accounts provide tax advantages, Congress has limited the amount of money that can be contributed. Generally speaking, contribution limits get raised every couple of years, and limits vary depending on the type of retirement account. Roth IRAs as of 2023 has a contribution limit of $6500 yearly in total.

Does That Mean You Can Contribute $6500 to Each Roth IRA You Own? 

No, you are only allowed to contribute a total of $6500 to all of them. Now, if your spouse has a Roth IRA, then each of you are allowed to contribute $6500 for a total of $13,000 for a married couple. Additionally, if you are over 50 years old, you can qualify for the catch-up provision and add an additional $1000. 

Before you get going, you do need to know whether you’re eligible to contribute, and sometimes you may not be able to or can only partially contribute. It depends on your income and your AGI (adjusted gross income). It is beyond the scope of this article to get too much into the details, so either consult your financial planner or check out this resource.  

Why Would I Want More Than One Roth IRA?

There is only sometimes a good reason why you would want more than one Roth IRA. It can add to the list of accounts you need to keep track of and be a headache. Often, if a person has more than one Roth IRA, it is for personal reasons rather than because it is financially beneficial. For example, they like this new brokerage house’s services, so they opened an account but still wanted to keep their account open at the old brokerage. 

Some folks will have Roth IRAs at multiple institutions/brokerages because they see it as a form of diversification. These folks are concerned that if a brokerage (Schwab, Fidelity, Empower, TIAA Cref, etc.) fails for whatever reason that at least their money isn’t all confined to one place. While this would be an infrequent event and it is a lot more likely that the investor would choose bad investments to lose their money before the actual brokerage would fail it nonetheless provides reassurance to them. 

A side note there is something called SIPC which almost all brokerages are part of. It is a form of insurance that, if a brokerage house should fail that an investor is insured to get back up to $500,000 of their money. SIPC coverage does not mean you are covered if you choose bad investments and lose your money in the stock market. Get the details from SIPC’s website. 

Can Couples Have a Joint Roth IRA?

No, couples can’t have any joint retirement accounts. An IRA stands for an individual retirement account and is always solely linked to one person’s social security number. Nevertheless, a married couple will impact each other depending on what they do with their Roth IRAs, so it is crucial to make decisions jointly. You should also remember that if your spouse has a Roth IRA, it doesn’t mean you should shrug off having one of your own. There are reasons why you both want to own one and contribute money towards your retirement account in a Roth IRA. 

Need help communicating with your partner? Check out this resource.

Can Couples Have More Than One Roth IRA?

Yes, couples can have multiple Roth IRAs if they choose. There is no limit on the amount of Roth IRAs a couple owns. However, contribution limits don’t change, and Roth IRAs can only be registered to one person’s social security and name. There is only sometimes a good reason to have multiple Roth IRAs, so couples may be better off keeping it simple with one each.

What Is a Roth IRA?

A Roth IRA is a type of account that is designed for retirement savings. Like other retirement accounts, you contribute to the account while you have earned income, and then when you retire, you begin taking withdrawals. Additionally, a Roth IRA has tax advantages. The benefit to the Roth is that qualified withdrawals will allow both the earnings and principal to come out tax and penalty-free. You contribute to a Roth IRA on an after-tax basis. Meaning you pay taxes out of your paycheck before the money goes into the Roth IRA. The most common investments inside a Roth IRA account are mutual funds, ETFs, stocks, and bonds.  

What is the Difference Between a Roth IRA and a Traditional IRA?

Until 1997 there was only one type of IRA that most people were concerned with: the Traditional IRA. That year Congress introduced the Roth IRA, which works oppositely to a Traditional IRA from a tax standpoint. However, outside of how the taxes work with these two retirement accounts, they are similar in many other respects. They are both designed with the same objective in mind: to get people to save for retirement and to provide a tax incentive to do so. 

So, what is the tax difference? With a Traditional IRA, you typically make contributions on a pre-tax basis, and with a Roth IRA, you make contributions on an after-tax basis. Another difference is that earnings are taxed on a Traditional IRA when they come out, and a Roth earnings don’t. The Last difference is that at age 72, you are required to start taking money out of a Traditional IRA but not with a Roth IRA. 

Final Words On, Can You Have More Than One Roth IRA

The article’s lesson is that you can have more than one Roth IRA. While it might not benefit you to have more than one Roth IRA, it can be done, and there may be situations or people’s preferences that you have multiple accounts of a Roth.

This article broke down most of the basics of a Roth IRA, but if you are working towards being financially sound, then it’s worth sitting down with a virtual financial advisor to get further guidance for your personal situation. I help millennials every day decide what combination of retirement accounts is right for them (401k’s, 403b’s, Traditional IRA, Roth 401, Roth 401k). Let’s chat to discuss your situation or subscribe to our newsletter. BlackBird Finance is a top virtual financial advisor that operates as a fiduciary on a fee-only basis and provides free no-obligation consultations.

This article reflects the insights and opinions of its author and is not a recommendation or endorsement of their views or services.