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Question:


Can a person have more than one IRA account, traditional or Roth? And if so, is there any financial gain by doing this?
-MrEdelman


Answer:


You can have as many IRAs as you like, but the maximum total contribution remains the same – $5,000 a year or $6,000 if you’re over 50. Contributions to a traditional IRA provide an immediate tax break, but withdrawals later in life are taxed as ordinary income. A Roth works in reverse; you pay with after-tax dollars but withdrawals are yours free and clear. It can make sense to have a traditional IRA and a Roth if you’re not sure what your tax liability is going to be in retirement. It’s a way to hedge your bets.
 
Having both types can be even more useful if you expect to work after turning 59 and a half, the date when you can make IRA withdrawals without a penalty. That will enable you to take money out of the Roth tax free while you’re still working and in a higher tax bracket, then withdraw from the traditional IRA after you’ve retired and your bracket is lower. As for having more than one account of the same type of IRA, there’s no compelling reason as long as your account is with a firm that offers a wide spectrum of investment choices.
-Conrad de Aenlle



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