Many people wonder if you can open multiple IRA accounts, and the short answer is yes, it is something that is legally allowed. However, just because it is legal doesn’t necessarily mean that it’s something you should do.
There are many important things to take into consideration when opening multiple IRA accounts. Here are the key questions you should ask yourself before setting up multiple IRAs.
Do you need the tax benefits of both a traditional and Roth IRA account?
- This is the main reason why people opt to open multiple IRA accounts. Traditional IRA accounts give you tax breaks for deposits during the year, but Roth IRAs give you tax breaks in the year that you withdraw them.
- There are advantages and disadvantages to using both types of IRAs. You might opt to use a traditional IRA for a personal benefit today (such as a tax deduction).
- On the other hand, use a Roth IRA for a long-term investments to capture the benefit when you truly retire and withdraw tax free money.
Are you willing to manage the paperwork for two IRAs?
- While multiple IRAs can come with tax benefits, they can also come with a lot of extra paperwork.
- This means higher chances of making mistakes with your paperwork or taxes, or missing important deadlines that could negatively affect your account’s growth.
- Before you get set up with multiple IRAs, be realistic with yourself and decide if you are willing to spend the extra time and energy to manage two accounts.
Do you have a good financial institution on your side?
When opening any financial account, it’s important to work with providers who are going to meet your needs.
Is their staff friendly, knowledgeable, and available to help when you have problems? Do they offer the investment options that you need? Doing your research before choosing an account provider is crucial.
After pondering all the pros and cons of opening multiple IRA accounts vs. one IRA account, you will be ready to make the best choice for you and your financial future.
If you are interested in opening an IRA account, contact Quest Trust Company today! QTC offers completely self-directed IRAs with flexible investment options and fast processing times. This gives you more control over the way you manage your money and plan for the future.