Even if you have a good grasp on your IRA and you know how to proceed with your contributions and withdrawals (if you don't, check out the other articles in our IRA Center), some confusing special situations can arise.

You may switch jobs and have to decide what to do with your existing IRA. You might need to consolidate multiple IRAs. Or, with the unfortunate passing of a loved one, you might inherit an IRA. Yes, it can happen to all of us; just when you think you have it all figured out, another variable drops into the equation and brings on a new headache.

Don't worry! We have some answers for you.

Can I have multiple IRAs?
Yes. There is no limit on how many IRAs you can have, but the contribution limit for all of your Traditional and Roth IRAs combined must remain under the contribution limit for that year. Just because you have two IRAs doesn't mean you can put away twice as much. (Nice try!) However, watch out for all those fees with multiple IRAs !!

Can I combine my IRAs?
You certainly don't need to combine your IRAs, but it will likely make things simpler and leave less of a chance for error. Aiming for the least amount of paperwork possible is a pretty smart goal. There are some potentially expensive pitfalls in rolling over IRAs, so consulting with a financial advisor would be wise before taking action.

You can even convert your Traditional IRA to a Roth IRA, if you qualify. We can help you answer the question: Should I convert to a Roth IRA? But since everyone's situation is unique, consulting a financial advisor can help make certain that the decision is right for your personal circumstances.

What are my options if I inherit an IRA?
Losing a loved one can be incredibly difficult, and having to deal with financial issues during those hard times is something none of us want. But the question still remains: What happens if I inherit an IRA? The simple answer is that the responsibility becomes yours. The earnings made and any future payouts now belong to you. But any taxes due are now your responsibility as well.

You may have the option of taking a lump sum and closing the IRA, but keep in mind that if you do so, you will immediately owe taxes on the entire amount.. The simplest, most efficient, choice for many inverstors is to roll any inherited IRAs over into your own IRA, if that is a possibility.

Your options will vary slightly depending on the status of the inherited IRA and on your own retirement plans. Consulting an advisor is the safest thing to do, considering you are dealing with an account that you have not set up yourself.