A Roth IRA is just one of several types of Individual Retirement Accounts that provide the account holder with tax advantages. The Roth IRA is for those who earn an annual salary that is less than the amount stipulated each year by the IRS. While contributions to a Roth aren't tax-deductible, earnings can be withdrawn tax-free if you're at least 59½ years old and have had the Roth for at least five years. Also, there's no mandatory distribution age, which means you can leave it in the Roth to continue growing. While there are restrictions on annual contribution amounts with Roth IRA accounts, there are no restrictions when it comes to how many Roth IRA accounts you can open.
Multiple Financial Institutions
It is possible to have separate Roth IRAs across many different financial institutions. For tax purposes, the IRS lumps all accounts into one, which means the contribution limits for Roth IRAs apply to the total of all your accounts.
Multiple Roths Within the Same Institution
You can have multiple Roth IRA accounts with the same company, but similar to when the accounts are spread out across different financial institutions, they all count as one when tax time comes. For example, if you are under the age of 50, you can contribute a maximum of $6,000, which can be evenly distributed across all your accounts, or you can put all the money in one account and nothing in the others. You cannot exceed $6,000 with whichever combination of deposits you create.
Estate Planning Convenience
Multiple IRA accounts allow you to easily designate multiple beneficiaries as part of your estate planning, eliminating the need to divide any assets as would be the case with a single Roth IRA account. If you want to divide your inheritance 50/50 amongst your two children, simply contribute identical amounts in both IRA accounts.
Hedging Your Bets
Having multiple Roth IRA accounts allows you to diversify by investing in accounts across various financial institutions with different investment strategies. This diversification allows you to hedge your bets, so that if one doesn't perform well, the other can be a backup.
Multiple Account Downsides
The main downside of having more than one Roth IRA account is the logistics around having more investments to keep track of than you would with a single account. In addition, you are likely to incur a usage fee with each account, which will multiply as you open more accounts.
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