How many Roth IRAs can I have? And if I do a conversion, can I just put it in one of the accounts I already have?
There are a couple of different ideas to unpack here, so let’s start with the easiest. You can technically contribute to as many Roth IRAs as you would like – as long as the total amount you’re contributing to all of them doesn’t exceed the annual limit. This year, that limit is $6,000 if you’re younger than 50 and $7,000 if you’re 50 or older; in 2023, it will be $6,500 and $7,500, respectively. (We should also note that traditional IRAs are also a part of this "combined" annual limit.)
And while having just one account to which you contribute is generally more convenient, some folks like the flexibility that having multiple accounts can offer. For instance, maybe you want to invest two Roth accounts in completely different investments, or you want to earmark different accounts for different purposes or perhaps you want to increase your total FDIC insurance coverage. This decision really comes down to the complexity of your financial situation and your ability (and willingness) to deal with the additional recordkeeping, tracking, and paperwork of using multiple accounts. And don’t forget that more accounts will mean more fees.
As for funds that you’re converting to a Roth IRA, this is an example in which it definitely makes sense to create a separate account. There are different IRS rules for "converted" money versus "contributed" money – particularly when dealing with holding periods – so having "co-mingled" money can make things more complicated. This same notion holds true if you ever inherit a Roth IRA; it’s typically best to keep it separate from any other Roth money.
The Simply Money Minute is that we like to keep things simple. So, generally speaking, we recommend having as few Roth IRAs and/or traditional IRAs as possible. But everyone is different. If you believe your financial circumstance calls for two, three or even four Roth IRAs, just make sure you’re able to keep track of them all – and don’t contribute more than the annual limit.