What to do with multiple IRAs?
I need help/advice. For important context, I’m 22 in Missouri with a 1099 subcontractor job on track to gross just under 100k for 2026. I have a traditional IRA with around $14k that was my 401k at a previous employer. I haven’t contributed to it since 2023.…
I need help/advice. For important context, I’m 22 in Missouri with a 1099 subcontractor job on track to gross just under 100k for 2026. I have a traditional IRA with around $14k that was my 401k at a previous employer. I haven’t contributed to it since 2023. I also have a Roth IRA that I maxed out last year and will max out this year. Currently sitting around $22k. Both of these accounts are currently with T. Rowe Price in their preset retirement funds. I am planning on rolling my Roth over to Robinhood for their 3% match and better accessibility for me to manage with ETFs instead of a mutual fund. Where I’m lost and seeking advice is what to do with the traditional IRA, I dont think I want multiple retirement accounts and since they’re both with T. Rowe Price I can convert the traditional IRA to a Roth before transferring it to Robinhood, but I would have to pay income tax on that 14k. I could transfer it over time to lessen the tax hit and not mess with my tax bracket (which I am ignorant on). Is there something I’m not thinking of with the traditional IRA? Would it be worth it to keep it and do something with or should I convert it and only focus on my Roth? I don’t think I’ll have another employer sponsored plan in my future so I’m okay with converting it. Please help me decide what to do. TLDR: 22 years old with a traditional IRA and a Roth IRA, not sure if I should keep both or not. What do?
Collected discussion
Is there something I’m not thinking of with the traditional IRA? Would it be worth it to keep it and do something with or should I convert it and only focus on my Roth? You are greatly underappreciating the power of tax deferred assets. This is likely sourced from a lack of understanding of the progressive nature of the tax system. The Roth vs Traditional thing can be confusing. Review how tax brackets actually work. This video explains the progressive nature of tax brackets. https://www.youtube.com/watch?v=VJhsjUPDulw Then, once you have a handle on the progressive tax system, read this below to help connect the dots on why optimizing tax deferred assets may lead to the most tax efficiency over one's lifetime. It is also why converting tax deferred assets to Roth during one's working years may not be tax efficient. https://reddit.com/r/personalfinance/comments/10qwnrx/why_you_should_almost_never_contribute_to_a_roth
Opened an account with Fidelity a few months ago but cannot directly transfer money from my bank to them. It errors out each time and I am not about to wire transfer every time I want to invest. Robinhood is appetizing because of the gold subscription with the 3% IRA match AND the 3.something percent APY on “buying power” kept as cash within the brokerage account. To me, it’s like a HYSA, brokerage account, and IRA all in one simple place. I don’t know anything about schwab.
Appreciate the links and information. I’ll get back to you once I’m up to speed.
It would behoove you to figure out the Fidelity issue. They've also enabled Plaid linking in the past week if you want to try again. You can have as many brokerage and IRA accounts as you want. You could (e.g.) do new contributions at RH for the match, and the larger chunks at fidelity for the service. Fidelity pays ~3.5% on cash with no membership fees (set core fund to spaxx or buy sprxx). RH pays 0% unless you pay for Gold. Again, I do use both. Best of luck
Can I ask why you want to use RH instead of Fidelity or Schwab? Both have live chat and better support than RH. I use all 3, but execution is significantly worse at RH, and the only reason I would transfer there is for a large bonus on the whole transfer (not just new contributions, which everyone gets)
To me, it’s like a HYSA, brokerage account, and IRA all in one simple place. So is Fidelity and Schwab. SPAXX is the settlement fund in Fidelity (1 option). As for the transfer, that should be easily remedied with a chat with your bank or Fidelity. The IRA match is nice though. As for the Trad vs Roth IRA, that's totally dependent on your income. If you're in a low tax bracket, paying tax now would be better than doing it later or breaking it up. At $100k income it's probably worth leaving where it is.
Okay. Definitely not converting the trad to Roth, BUT now I’m wondering where to put my contribution limit. Isn’t focusing on one account better than splitting my investments between them? I can either go full traditional with my contribution limit going forward and enjoy the tax break now, or go 50/50 to keep that Roth ball rolling a bit but then aren’t I hurting the “compoundingness” of working on only one account? What do you think?
Robin Hood isn’t a trustworthy brokerage, they are PFOF agents. You can buy ETF’s anywhere you can trade anything else.