Can I have more than 1 Roth IRA?

[Guest Tyster]

Hi folks! This is my first posting here so forgive me if this topic has been covered.

Both my wife and I each have our own Roth IRAs (along with a couple of standard mutual funds), plus our 401K's. Retirement wise we'll be OK for cash, but I'd really like to convert our other mutual funds to Roths if possible. So...

Is it possible for 1 individual to own more than 1 Roth IRA (in the same name)?

I don't THINK its allowed, but I haven't been able to find a clear answer to this question.

Many Thanks!

Tyster

[Guest allancoleman]

YES , Tyster , you can have as many Roth IRAs as you want . I , myself , have three Roth IRAs with Fidelity , Schwab , And Vanguard . I do intend to consolidate them with two custodians in the future . And , in the end , I may decide to have just one single Roth account with one custodian , probably Vanguard .

My wife also has her own Roth IRA account with a single custodian .

As you are married , your spouse will be your automatic " named beneficiary " . In the event of the death of the account holder and when the account passes to the spouse who is the automatic beneficiary , PLEASE designate a new " named beneficiary " to that account cause in the event of that last person's death , the account will pass to heirs and they may have to take those funds in as little as one to five years depending on the different circumstances .

My wife has instructions in the event of my death to " rename " my accounts ( IRAs , Roths , 401(k)'s ) in her own name as soon as possible and then to specificly designate a " named beneficiary " to her new renamed accounts . And , in the event of my wife's death , I will go her Roth account custodian with a death certificate and " rename " her account in my own name and name a specific " named beneficiary " for my newly named Roth account . I would do the same with my wife's IRAs in the event of her death , but she's already converted all her deferred accounts ( IRAs ) to Roths .

PLEASE see a CPA or a qualified tax person ( not me ) if you don't understand the importance of this . And I'm sure there'll be other more qualified folks here who will answer your post too . You've definitely come to the right board forum to get excellent advice on matters like this .

[Guest Tyster]

Wow! Thats good news!

I definitely need to see a financial planner.

Many Thanks Allen!

...Tyster

YES , Tyster , you can have as many Roth IRAs as you want . I , myself , have three Roth IRAs with Fidelity , Schwab , And Vanguard . I do intend to consolidate them with two custodians in the future . And , in the end , I may decide to have just one single Roth account with one custodian , probably Vanguard .

My wife also has her own Roth IRA account with a single custodian .

As you are married , your spouse will be your automatic " named beneficiary " . In the event of the death of the account holder and when the account passes to the spouse who is the automatic beneficiary , PLEASE designate a new " named beneficiary " to that account cause in the event of that last person's death , the account will pass to heirs and they may have to take those funds in as little as one to five years depending on the different circumstances .

My wife has instructions in the event of my death to " rename " my accounts ( IRAs , Roths , 401(k)'s ) in her own name as soon as possible and then to specificly designate a " named beneficiary " to her new renamed accounts . And , in the event of my wife's death , I will go her Roth account custodian with a death certificate and " rename " her account in my own name and name a specific " named beneficiary " for my newly named Roth account . I would do the same with my wife's IRAs in the event of her death , but she's already converted all her deferred accounts ( IRAs ) to Roths .

PLEASE see a CPA or a qualified tax person ( not me ) if you don't understand the importance of this . And I'm sure there'll be other more qualified folks here who will answer your post too . You've definitely come to the right board forum to get excellent advice on matters like this .

[Guest allancoleman]

Fortunately , Tyster , the IRS has taken alot of the concern out of Individual Retirement Arrangements ( IRAs ) , both IRAs & Roths , as the IRS and custodians usually automaticly code spouses as " named beneficiaries " , so you only need to be concerned with this in the event of you or your wife's death .

However , in the event of a death , if you don't have a specific named beneficiary , the heir may not be able to spread the distributions of their newly inheired IRA over their life time and the IRS is very happy to receive their taxes on a large account in a very short period of time .

And Roths , by the way , pass on to heirs much more easily than IRAs because Roths don't have RMD ( required minimum distributions ) . Most all distributions coming from a deferred account ( IRAs & 401k ) are taxable whereas all distributions from a Roth are taxfree forever . And nothing beats taxfree .

Careful about seeing a financial planner , unless it's John G , , wouldn't want to see you " sold " any products .

[John G]

STOP! You are mixing different issues and your lay person terms don't match IRA/Roth jargon.

First, it is true that there is no specific limit on the number of IRA or Roth accounts, or the number of custodians you use. Practical considerations like annual fees and tracking weigh against lots of accounts, but there are often other reasons for having multiple IRA/Roth accounts such as due to rollovers or access to mutual funds. The number of accounts/custodians has nothing to do with the annual limit on contributions to the combination of ALL IRAs and ALL ROTHS. In other words, you don't get to contribute more because you have more accounts. The contribution ceiling and eligibility is a function of your earned income, age and tax filing status. See IRS Publication 590 for more details.

Second, be careful with your terminology. You don't CONVERT mutual funds to a Roth. You convert an IRA (in whole or part) to a Roth. Yours to yours. Your spouses to hers. No mixing across gender! You can not "shift" an existing mutual fund to a Roth. Contributions to a Roth are made in cash.

If the mutual funds you are referring to are IRA accounts, then you might be able to CONVERT these assets to a Roth(s). Note, the income threshold and tax filing status for a conversion are different that for contributions. Again, there is more information in IRS Publication 590. (the 2006 version is not yet available as of last week in Colorado)

Now, even if you have IRA mutual funds and meet the 2007 rules for conversions - - that does not mean that conversion is a great idea. It is good to convert in a year when your income and taxes are low (such as if you shift jobs and have a partial year, or your wife stops working to start a family). It is good to convert when you reside in a no income tax state but expect to move. It may be reasonable to convert if you expect your future income tax brackets to be higher in retirement. You may be able to set up a simple spreadsheet and try different assumptions about income, taxes, future income, future tax rates, etc. When conversions were first proposed, they were often talked about as some kind of "free money". They are not. For a lot of folks, its the trade off between paying taxes now or growing the account (including the funds that would have paid the taxes) and paying the taxes in the future. If the expected tax rates (now and decades into the future) are the same, much of the advantages of a Roth are a "wash".