How many IRAs can you have in 2024?

Individual retirement accounts(IRAs) are some of the best accounts to help you save for retirement and build wealth. Not only that they come with a lot of tax benefits, but you also get a wide range of investment options compared to 401(k) plans. IRAs are flexible and easy to set up, and you can open as many as you want. While there is no limit to how many IRAs you can open, however, your total contribution to your IRAs cannot be over the acceptable limits across your accounts in any given year. For 2024, the contribution limits to an IRA are $7,000 with an extra $1,000 if you are 50 or older. You should also note that the number of IRAs you have does not necessarily come with additional retirement benefits. So, how many IRAs can you have?

Quick answer: There is no limit to how many IRAs you can have. The important thing to keep in mind is that no matter how many IRAs you have, your total contributions cannot go over the acceptable limit on IRAs set by the IRS. According to the IRS, your total contribution to all your IRAs and your spouse’s IRAs:

Cannot exceed your joint taxable income or,
Be more than two times the contribution limit on IRAs, whichever is greater.

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How to make contributions if you have multiple IRAs?

Many people get confused with their contribution limits when they have multiple IRAs. If you have more than one IRA and are confused about how to make contributions to each IRA, here is a tip for you. The total contribution to all your IRAs cannot be more than the contribution limits allowed for an IRA in any given year.

For example, let’s assume that you are under 50 and your income is more than the IRA contribution limits for the year you want to make contributions. Here are your options.

Open a traditional IRA and contribute the maximum allowed by IRS which is $7,000 in 2024 and $6,500 in 2023

Open a Roth IRA and contribute the maximum contribution allowed by the IRS which is $7,000 in 2024 and $6,500 in 2023

Have a Roth IRA and a traditional IRA and allocate whatever amount you want in each account as long as the total contribution for both IRAs is not more than the limits allowed for an IRA. For example, you can put $4,000 in your Roth IRA and $3,000 in your traditional IRA in 2024. These contributions are acceptable because your total contribution will not go over the IRA contribution limits of $7,000.

If you are married, your joint contribution cannot be more than $14,000 in 2024 and $13,000 in 2023. In other words, each one of you can contribute up to the limit allowed for an IRA which is $7,000 for a joint contribution of $14,000.

If you are 50 or older, your IRA contribution limit goes to $8,000 for single and a joint contribution of $16,000 for married couples.

What if your income is less than IRA contribution limits?

If your total income is less than the IRA maximum contribution limits, the amount you can contribute to your IRA will be capped at your total income level. For example, if you made $6,000 in 2023, your total contribution to an IRA cannot be more than $6,000 which is your total income. If you have a Roth IRA and a traditional IRA, the sum of contributions on both accounts cannot be more than $6,000. This is because the IRS does not allow you to contribute more than your income.

Does it make sense to have multiple IRAs?

Before you open multiple IRAs, understand why you need them and the benefits of each account to your retirement saving goals. Any retirement account you open should help you achieve the following goals.

Give you tax advantages
Help you save for retirement
Grow your account faster
Give you some form of income
Protect your money
Can allow you to transfer wealth for example from one account to another or your descendants

Before you worry about how many IRAs you can have, evaluate the benefits you will be getting from each account.

Since different IRAs come with different benefits and drawbacks; let’s see their tax advantages. With a traditional IRA, your contributions can be tax deductible which lowers your taxable income every year you made contributions. But, you pay applicable tax during retirement. The Roth IRA, on the other hand, lets you contribute after-tax money which allows you to grow your account tax-free and withdraw your money tax-free.

You can easily see that the main difference between a Roth IRA and a traditional IRA is when tax benefits are realized.

Should you have a Roth IRA, a traditional IRA, or have both accounts?

If you don’t mind paying taxes now and are anticipating having a higher retirement income, open a Roth IRA. Since your withdrawals will be tax-free, distributions from your Roth IRA will help you lower your tax liabilities during retirement.

If you want to lower your current tax liability and are anticipating a lower retirement income, open a traditional IRA.

Opening a Roth IRA will also be a good choice if you have other pre-tax retirement benefits from your employer such as a 401(k) plan. Any contribution you make to your pret-tax 401(k) will help you lower your current tax liabilities while the Roth IRA will help you lower your retirement tax liabilities.

When should you have multiple IRAs?

Now, let’s see a situation where it can make sense to have multiple IRAs. First, if your employer does not have a 401(K), you can open a traditional IRA. The traditional IRA gives you tax benefits just like your 401(K) does. With a traditional IRA, you can lower your taxable income since your contributions might be tax-deductible.

On the other hand, your Roth IRA allows you to contribute after-tax money. If for example, you think you will be in a higher tax bracket during retirement, you can open a Roth IRA. Your contributions and ROI will grow your account tax-free and pay no tax on distributions. The only tax you can worry about during retirement will be from your actual income.

The only time it makes sense to have multiple IRAs is when you don’t have retirement benefits with your employer. But, if you have a 401(k) with your employer, opening a Roth IRA will be the best course of action.

Married couple IRA contribution limit

For married couples, it can make sense to have multiple individual retirement accounts. The IRS does not allow joint IRAs. That is if you and your spouse want to contribute to an IRA, you must open separate IRAs. No matter how many IRAs you open, however, your total contributions cannot be higher than IRS contribution limits or joint taxable income depending on what is lower.

The IRS has the same contribution limit of $7,000 on both a traditional IRA and a Roth IRA in 2024. In 2023, you can contribute up to $6,500 for a Roth IRA or a traditional IRA. If you and your spouse contribute to your IRAs, your total contributions should not be more than twice these limits.

For 2024, your joint contribution to IRAs should be no more than $14,000 if you are under 50 or $16,000 if both of you are 50 or older. For 2023, the joints are $13,000 if you are under 50 and $14,000 if you are 50 or older.

If your joint income is lower than 2 times IRA contribution limits, however, the amount you can contribute to your IRAs cannot be higher than your joint income. The key here is that you cannot contribute to an IRA more money than you made.

Can I contribute to a Roth IRA if I have a 401(k) with my work?

Yes, you can contribute to a Roth IRA or a traditional IRA even if you have other retirement benefits from your work such as 401(k) or 403(b). The only thing to remember is that you may not be eligible to deduct most of your traditional IRA contributions. The IRS denotes that your filing status, modified adjusted gross income (MAGI), and your spouse’s participation in other retirement accounts from work will affect your deductions. For more details on MAGI, refer to the guidelines provided by IRS.

When can you withdraw money from an IRA without a penalty?

Typically, you must be 59½ to withdraw money from your IRA without paying a penalty. Taking money out of your IRA before turning 59½ will trigger a 10% tax penalty. If you have a traditional IRA, you will be required to start taking required minimum distributions (RMDs) from your account when you turn 73.