ROTH IRA's

[Guest jkriv03]

I was just wondering if it is possible for one person to fund more then one IRA. Could I set one up thru Vangurad and also have one thru fidelity so that when I'm 60 I can get my money out of both? I am in this for the long haul and would like to be financiall set. Thanks, Jason

p.s. i know with vanguard u need to start witha 3000 dollar investment while with fidelity i can start one with no balance and pay 200 automatically out of my savings. Thoughts on this??

[John G]

There are no limits to the number of IRA / Roths you can have. No limits on the number of custodians. However, the maximum contributions in any one year apply to the combined contributions.

One reason not to have many IRA/Roths is that you are likely to have more annual fees to pay... and more paperwork to track.

[Guest jkriv03]

So.. you saying if i had 2 roths opened and the limit each yr is 4000, that i could only invest 2000 in each? Sorry was confused. Or do u mean still the max(4000) in each.

[John G]

If the max is 4,000 (based upon your qualifications) in a given year, then you could fund as many Roths as you want in as many locations as you want but the maximum combined contributions could not exceed $4,000. Two at 2k each - sure, or 1k at one and 3k at the other, or 4 locations at 1k each.... the IRS does not care about your personal arrangement, just that you qualify and abide by IRA/Roth regulations.

That is just for that single year.

You could open 4k this year with custodian X, then open a second account with custodian Z in the next year for 4k. After 10 years, you could have 10 different custodians - again the IRS does not care. You would be more likely to have multiple custoridans if you wanted different mutual funds that were not available through a single source like an online broker.

Remember, general mutual funds often have substantial overlaps in portfolio. This means that having lots of funds does not mean that you are significantly more diverse. In the case of very broadly based funds, you might find half of portfolio is the same companies - like DELL, Johnson&Johnson, Southwest Airlines, Carnival Cruises, Internation Paper, etc. That would not be the case if you wanted narrowly cast funds like Fidelity Health Care vs. an Extractive Minerals Fund at T Rowe were you would likely find zero overlap. If you start collecting lots of very different funds, you might want to consider a total market index fund which is near maximum diversification and very low annual expenses.

[mwyatt]

One other thing to consider, especially when you are just starting out, are account fees. Generally these are waived once the account reaches some amount. So consider exactly why you need (or think you need) to set up different accounts at this point. Check around, as you may find that you can accomplish your different funds family choices through one brokerage account. $50/year doesn't seem like much, but that will have a significatn impact on your return at the beginning.