[USER]

My husband and I are investing under our individual retirement accounts, both at fidelity.

Is it better to create a joint account and invest in 1 account rather than 2 separate accounts?

Does it matter?

[Tristan]

You can’t have a joint retirement account. So, if you want the tax advantages (either deferred or free growth) you have to invest individually.

I don’t know if fidelity offers this, but I can link clients accounts if they give permission so you can log in and see each others accounts with yours.

So maybe fidelity can do the same?

[Mark]

Iras can’t be combined. “Individual” retirement account. Having 1 account with 10k invest or 2 separate accounts with 5k each invested will compound identical, assuming investments are the same

[Rob]

The decision to consolidate investment accounts or keep them separate depends on your financial goals, tax considerations, and personal preferences.

Here’s an overview of the differences and considerations:

Individual Retirement Accounts (IRAs)
• Ownership: IRAs are individual accounts by law and cannot be combined or shared. Each spouse must maintain their own IRA (Traditional or Roth).

• Contributions and Limits: Contribution limits apply to each account separately, so having two IRAs doubles the family’s tax-advantaged saving potential (e.g., $6,500 per person annually, or $7,500 if over 50 in 2024).

• Tax Benefits: Keeping separate accounts maximizes tax benefits and allows tailored investment strategies for each account.
Joint Taxable Investment Account

• Ownership: A joint taxable account is shared and allows both spouses to invest together.

• Pros:
• Simplified management with one account to oversee.
• Shared ownership makes access easier for both parties.
• No contribution limits or restrictions on withdrawals.

• Cons:
• No tax-advantaged growth like in IRAs.
• Dividends and capital gains are taxable annually, and these taxes are shared based on ownership percentages.

Does It Matter?
1. Tax Advantages
• Retirement accounts like IRAs and 401(k)s offer significant tax benefits. Keeping these separate ensures you can both contribute the maximum amount annually.

• Joint taxable accounts are not tax-advantaged, so they’re best for investing additional funds after maximizing retirement contributions.
2. Investment Strategies

• Separate IRAs allow each spouse to:
• Use different investment strategies based on risk tolerance and time horizon.

• Take advantage of individual tax benefits, such as Roth conversions or differing withdrawal strategies in retirement.

3. Simplification vs. Diversification
• A joint taxable account can simplify management for shared savings or additional investments.

• However, keeping separate accounts can enhance diversification and give you more flexibility in how you structure your investments.

4. Access and Control

• IRAs are individual by nature and cannot be accessed by the other spouse unless specifically authorized (e.g., as a beneficiary).

• A joint account allows either spouse to manage or access the funds without legal hurdles.

Recommendation
1. Maximize Tax-Advantaged Accounts:
• Continue contributing to your individual IRAs to take advantage of tax benefits.

• Consider additional options, such as an HSA or a 401(k), if available.

2. Use a Joint Taxable Account for Extra Investments:
• Open a joint account for investments beyond your IRA limits.

• Use tax-efficient strategies like investing in ETFs or index funds to minimize taxable events.

3. Coordinate Investments:
• Regardless of account type, coordinate investment strategies to align with your combined financial goals, such as asset allocation and diversification.

[Author]

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