Yes, you can own both a traditional and Roth IRA simultaneously

You are allowed to have both account types open at the same time. The IRS does not prohibit it. What matters is how much total money you put into both accounts combined in a single year — that combined total has an annual limit.

The limit for 2024 is $7,000 if you are under 50, or $8,000 if you are 50 or older. That $7,000 or $8,000 is the ceiling for contributions across all your IRAs put together, not per account. If you contribute $4,000 to a traditional IRA, you can only contribute $3,000 to a Roth IRA that same year.

People choose to have both accounts for different reasons: a traditional IRA might lower your taxable income now, while a Roth IRA grows tax-free and lets you withdraw money in retirement without triggering taxes. Having both lets you use each account's strengths depending on your situation that year.

Key Takeaways

  • The IRS allows you to own a traditional IRA and a Roth IRA at the same time, but your total contributions to both accounts combined cannot exceed $7,000 per year (or $8,000 if you are 50 or older).
  • You can split your contribution however you want between the two accounts, as long as the total does not exceed the annual limit.
  • Your income level determines whether you can deduct a traditional IRA contribution if you also have a workplace retirement plan, which may influence how much sense it makes to fund both.
  • Keeping both accounts means tracking two separate statements and understanding the different withdrawal rules for each type.

How the annual contribution limit works across both accounts

The $7,000 annual limit (for 2024, under age 50) applies to the total of all your IRA contributions — traditional, Roth, SEP, and SIMPLE combined. You cannot contribute $7,000 to a traditional IRA and then another $7,000 to a Roth IRA in the same year. The IRS counts them together.

You decide how to split the money. You could put $5,000 in a traditional IRA and $2,000 in a Roth IRA. You could do $3,500 and $3,500. You could put all $7,000 in one account and nothing in the other. The split is yours to make, but the total cannot exceed the limit.

If you exceed the limit, the IRS charges a 6% penalty tax on the excess amount each year it stays in the account. That penalty stacks annually, so catching and fixing an overcontribution quickly matters.

When having both accounts makes financial sense

Some people benefit from splitting contributions between account types. If your income is high enough that you cannot contribute to a Roth IRA directly (income limits apply), you might put some money in a traditional IRA for the tax deduction and some in a Roth through a backdoor Roth conversion — a strategy where you contribute to a traditional IRA and then convert it to a Roth. Having both accounts open makes this process simpler.

Others use both accounts to hedge against uncertainty about their tax bracket in retirement. A traditional IRA reduces your taxes now; a Roth IRA means you pay no taxes on withdrawals later. If you are unsure whether your tax rate will be higher or lower in retirement, splitting contributions between both types spreads the risk.

A third reason is flexibility. A Roth IRA lets you withdraw contributions (not earnings) at any time without penalty. A traditional IRA penalizes withdrawals before age 59½. If you want some money accessible and some locked away for long-term growth, both accounts serve different purposes.

The traditional IRA deduction if you have a workplace plan

If your employer offers a 401(k), 403(b), or other workplace retirement plan, the rules for deducting a traditional IRA contribution change. Your ability to deduct a traditional IRA contribution phases out based on your income and filing status.

For 2024, if you are single and covered by a workplace plan, the deduction phases out between $77,000 and $87,000 of income. If you are married filing jointly, it phases out between $123,000 and $143,000. These numbers change each year.

This matters because if you cannot deduct your traditional IRA contribution, you might as well contribute to a Roth IRA instead — you get the same after-tax contribution, but the Roth grows tax-free. Having both accounts open gives you the option to choose which one makes sense based on your income that year.

Tracking and managing two separate accounts

Owning both accounts means receiving two separate statements, two separate year-end tax forms (Form 5498 for each account), and keeping track of two different sets of rules. Your traditional IRA has required minimum distributions starting at age 73; your Roth IRA does not. Your Roth IRA lets you withdraw contributions anytime; your traditional IRA does not without penalty.

You will need to track your basis in the traditional IRA — the amount of non-deductible contributions you have made — because that affects how much of a conversion to a Roth is taxable. If you have multiple IRAs, the IRS treats them as one pool for tax purposes, even though they are separate accounts.

Many people use a single financial institution for both accounts to simplify statements and transfers. You can open both at the same bank, brokerage, or credit union.

Converting between accounts

You can move money from a traditional IRA to a Roth IRA through a conversion. When you do, you owe income tax on the amount converted (unless it was a non-deductible contribution). The conversion counts toward your annual contribution limit only if you do it within 60 days of a distribution from the traditional IRA; otherwise, it is a separate transaction.

Some people convert small amounts from a traditional IRA to a Roth each year, paying a small amount of tax annually rather than a large amount all at once. This is called a ladder conversion and is one reason people maintain both account types.

You cannot undo a conversion after 2017, so it is a permanent move. Plan conversions carefully or speak with a tax professional about whether a conversion makes sense for your situation.

Frequently Asked Questions

Do I have to contribute to both accounts every year?

No. You can contribute to one account one year and the other account the next year. You can also skip a year entirely and contribute nothing. The only requirement is that your total contributions across all IRAs in any given year do not exceed the annual limit.

What happens if I accidentally contribute too much to both accounts?

The IRS charges a 6% penalty tax on the excess amount each year it remains in the accounts. You can fix it by withdrawing the excess and any earnings on it before your tax filing deadline (including extensions). If you catch it early, the penalty is smaller.

Can I have a Roth IRA and a traditional IRA at different banks?

Yes. You can open accounts at any financial institution that offers them. However, the IRS still counts all your IRA contributions together toward the annual limit, regardless of where the accounts are held. Keep track of contributions across all institutions.

If I convert my traditional IRA to a Roth, does that count toward my contribution limit?

A conversion does not count toward your annual contribution limit. You can convert any amount from a traditional IRA to a Roth in a single year without hitting the $7,000 limit. However, you owe income tax on the converted amount (except for non-deductible contributions).

Which account should I fund first if I can only contribute to one?

That depends on your income, tax bracket, and whether you have a workplace retirement plan. If you cannot deduct a traditional IRA contribution because of income limits and a workplace plan, a Roth IRA is usually the better choice. If you can deduct a traditional IRA and expect to be in a lower tax bracket in retirement, the traditional IRA may make more sense. Consider your specific situation or speak with a tax professional.