Today’s blog post comes courtesy of a question from our reader, Snax, a hipster from LA who loves peanut butter and belly rubs.
The question is how many IRA’s can you own?
The simple answer is as many as you want. BUT (all my friends have big butts), fewer is typically better. Keep things simple should be the motto. It helps with allocation and re-balancing, and even costs.
Today, I am just focusing on Traditional IRA’s, not Roth IRA’s, or Rollover IRA’s or Inherited IRA’s.
So, anyone with earned income can contribute to an IRA.
However, not everyone gets a deduction and that’s where people get confused. Just because you don’t get a deduction doesn’t mean you can’t/shouldn’t open one.
The ability to get a deduction is based on your income (married or single) and if you or your spouse have an employer sponsored retirement plan.
Your total contributions to all your IRA’s combined (including any Roth’s if you have them) cannot exceed $5,500 annually ($6,500 if age 50 or older) in 2017.
TIP: A non-working spouse can make a contribution to a spousal IRA as long as you file jointly and you have earned income.
What the heck goes in my IRA?
An IRA is a tax deferred vehicle, typically funded with stocks, bonds, mutual funds or ETF’s, sorry no favorite chew toys.
Tax deferred means that you put off paying taxes that are generated by income, dividends or trades in the IRA until you start to withdraw the money.
Well, if the taxes are deferred, things like dividend paying stocks, high turnover mutual funds, and bonds/fixed income (interest generating investments) are great options. Again like most things financially related, it depends on what your whole portfolio looks like.
We’ll get into IRA’s and Roth’s in more detail on another post, but right now I gotta go for a walk. Feel free to send me a question. 🙂