I am a college student who is relatively new to investing. This summer, I opened a Roth IRA through T. Rowe Price and I have contributed $2,500. Can I open another Roth IRA with another company such as Vanguard, and buy mutuals funds there as well, provided I don't go above the $5,500 limit?

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    Shankar, be sure to read the paragraph that littleadv added to his answer. It is important. If you will not have enough earned income for 2013, you should close out the Roth IRA that you have opened (or withdraw excess contributions and any earnings from the excess contributions) by April 15, 2014. – Dilip Sarwate Oct 23 '13 at 13:23
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    @littleadv: The money is from summer internships, so it's earned. Thank you for your answer. – Shankar Kumar Oct 23 '13 at 16:57

There are brokers that offer mutual funds with no fee. Others offer no commission ETFs. This would enable you to buy funds or ETFs from multiple fund families, if that's your wish, but keep them in the same account. My own preference is to keep things as simple as possible, the fewer accounts, the better. If somehow one broker's offering isn't to your liking, you should be able to do it with 2.

Great start, and the Roth is a great choice to kickstart your retirement account.


Yes, you can. The limit is for all the contributions together.

Just to make sure you're aware of this - you cannot put in an IRA (Roth or Traditional) more than your earned taxable income. I.e.: salary/self-employment income. You cannot put anything in IRA if all your income is non-earned (capital gains, passive income, gifts, inheritance, etc).

  • Yes, but don't exceed your taxable income for the year. irs.gov/Retirement-Plans/Plan-Participant,-Employee/… – mhoran_psprep Oct 22 '13 at 23:49
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    @mhoran_psprep taxable compensation, not income. There's a difference, although out of scope for this question:) – littleadv Oct 23 '13 at 0:00
  • @littleadv Actually, I think your response to mhoran_psprep is very much on point here, and I would recommend that you incorporate it into your answer. It is entirely possible that a college student might not have taxable compensation. Some time ago we had a question about whether a beginning graduate student could fund a Roth IRA out of his fellowship income when he had no earned income that year. – Dilip Sarwate Oct 23 '13 at 2:53
  • @Dilip good point. – littleadv Oct 23 '13 at 3:34
  • Right, and OP is a student, so this isn't for him - One can deposit to an IRA with no earned income if their spouse has earned income to cover both deposits. – JTP - Apologise to Monica Oct 24 '13 at 18:53

Since you are talking about small amounts of money, you are probably best keeping it all in one place. When you move above $50K or so, there may be a desire to move things round a bit. Keep your life simple as you are starting out.

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    you're not suggesting that at $1M, an investor have 20 accounts,right? Only to go to two at that level? Maybe 3 at $1M? Curious where this was going. +1 as a welcome, and I like the thought you put into the response. – JTP - Apologise to Monica Oct 24 '13 at 19:39
  • How to answer this...I am saying that if you have less than 50K (or so), keep it to one account. That does not imply that every time one goes above 50K they should break it into another account. And I am not saying that as I have accounts with far greater than 50K in them. – Pete B. Oct 28 '13 at 20:09
  • +1 KISS is always a good principle to follow. But there may be occasions where you'd want new accounts even for small amounts. If you get a cash bonus - why not? Easy money, just use a spreadsheet to track it all. – littleadv Oct 30 '13 at 2:17
  • Back in the early 90's I used to consider myself a "long distance whore", I'd switch to make a fast $50 or so, and I needed it back then. Do you have any of these "cash bonus" offers @littleadv? People have followed me to tradeking, but they will not pay a bonus to an IRA. – Pete B. Oct 30 '13 at 13:29
  • @Pete I know Etrade and Fidelity will, but not for $5k. On Etrade you can get $200 if you transfer $25K IRA to them, for higher amounts you get higher bonus. Check here: us.etrade.com/open-account/… – littleadv Oct 30 '13 at 17:00

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