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Dr. Don Taylor, CFA, Bankrate.com advice columnist How many IRAs can you have?

Dear Dr. Don,
How many IRAs, traditional and Roth, can a person purchase per year?
-- Gloria Grab-Bag

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Dear Gloria,
It's not the number of accounts but the aggregate contributions to those accounts that matters. Assuming you're eligible to contribute to both traditional and Roth IRA accounts, it's the sum of all the contributions attributable to that tax year that matters.

IRS Publication 590, Individual Retirement Arrangements spells out contribution eligibility and contribution limits. The Bankrate feature, "2006-07 retirement plan contribution limits," lists the maximum contributions.

If you can't decide between a traditional IRA and a Roth IRA, use one of the interactive work sheets available on many financial Web sites. I like the one on Fidelity's Web site. If you want to own both, and are eligible to contribute to both types of IRA accounts, then I'd suggest varying by year your contributions to a type of account, at least initially. That's because smaller accounts tend to have account fees that are waived for larger accounts.

In diversification, I think it is best when starting out building wealth in retirement accounts to concentrate your investments in diversified mutual funds rather than diversify your investments in concentrated mutual funds or individual stocks. Find a mutual fund family that offers no-load, broadly based mutual funds with low expense ratios and open up an account with them. A no-load index fund can be a good choice. Before taking the plunge, learn more about mutual funds by attending Morningstar's free Investing Classroom.

Bankrate.com's corrections policy-- Posted: April 16, 2007
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