I have a traditional IRA with a FSB. In January, I was thinking of setting up a second IRA with a discount broker. I know I could roll-over the money from the old one to the new one, but I'm thinking of keeping the old one for at least a while. Are there compelling reasons to avoid having two IRAs?What happens at retirement time?Is it necessary to notify either broker of the other IRA?
Hi, upapaepops.Are there compelling reasons to avoid having two IRAs?It creates some more overhead, but not a lot. If you're paying annual fees, usually $10 or so, you pay twice. You have more to keep track of. Not compelling reasons, I don't think.What happens at retirement time?You get to (and have to) make withdrawals from each account, as if the other didn't exist. But the sum of the withdrawals will follow the same rules as if you had your funds consolidated in a single account. Disclaimer: I don't have direct experience with this part yet, not being retired.Is it necessary to notify either broker of the other IRA?No.Be aware that the rules on contributions apply to the sum of your accounts, not to each separately. $2K max, total. And you can leave the accounts separate for a while, then combine them later. Just roll one into the other.Hope this helps.MichaelP.S. You're into birding, right? (I recall asking about your username earlier.) My wife subscribes to a birding list server. Last month there was a report of a Painted Bunting just five miles from where we live, outside Minneapolis. This is pretty unusual, as they don't normally get north of the Ozarks. We got directions, drove up, and saw it. Amazing sight--brilliant red, blue, green, and orange, all on one bird. If it had happened to be a female, though, no one would have id'ed it.
Are there compelling reasons to avoid having two IRAs?No. On the contrary, you can keep various IRA portfolios physically separate. Also, if you are paranoid, by putting IRAs in different brokers, you won't be caught if you need the money as the broker goes under. OTOH, if duplicate your portfolio in each account, you are doubling your expenses.You must make sure, however, that your total contributions to all accounts does not exceed $2k per year. Transfers and rollovers don't count.What happens at retirement time?Nothing, other than you must consider the aggregate value of your IRA accounts when calculating your withdrawal amount.Is it necessary to notify either broker of the other IRA?Nope, its none of their business.Zev
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