Y ou can own as many IRAs as you want. And for most people, it is a good idea to have more than one -- probably several.

Having multiple IRAs can help you keep funds locked up longer -- to earn more tax-deferred investment returns... meet family financial planning goals... reduce estate taxes... and attain other valuable objectives.

IRA flexibility

Multiple IRAs can greatly increase your flexibility in managing your IRA wealth. Keys...

Each IRA can have different beneficiaries.

After reaching your required beginning date (which is April 1 of the year following the year in which you turn 70 ½, you must begin withdrawing from your traditional IRA. However, the total minimum required annual distribution from all your traditional IRAs can be taken from any one of them -- leaving the other IRAs intact.

You can transfer funds between IRAs without any negative consequences until you begin taking required distributions at age 70 ½.

Use these rules to get the most from your IRA savings and maximize family wealth. How to do it...

Preserve funds for children. When one spouse inherits an IRA from the other, the surviving spouse can place the inherited funds in a new IRA set up for this purpose instead of rolling them over into his/her existing IRA. By doing so -- and by naming children or grandchildren as beneficiaries of the new IRA -- current minimum required distributions may be reduced, and decades of tax-deferred IRA earnings may be saved for the children.

Example: Two spouses are both over age 70 ½, and each owns an IRA. Each has named the other as his IRA beneficiary and is taking minimum annual distributions under the "recalculation" method.

If one spouse dies, the survivor can place inherited IRA funds into either his existing IRA or into a newly created IRA. If the funds go into...

The surviving spouse's existing IRA: The funds must be distributed at a rate based on the spouse's remaining life expectancy -- for instance, 10 years for a 79-year-old. When that spouse dies, all the funds in the IRA must be distributed and taxed within one year.

A new IRA created by the surviving spouse with children named as beneficiaries: The funds may be distributed over the joint life expectancy of the spouse and beneficiaries. (Nonspouse beneficiaries are treated as no more than 10 years younger than the IRA owner regardless of actual age.)

Result: The payout period over which minimum annual distributions must be made is increased to 18.4 years from 10 years for a 79-year-old IRA owner. This reduces required annual distributions almost by half, leaving more funds in the IRA for the children to inherit.

When the children do inherit the new IRA, they can take distributions from it based on their own life expectancies, which may cover decades. They may receive 30 or 40 years (or more) of tax-deferred IRA earnings and distributions that would have been lost entirely had the second IRA not been created.

That's one benefit of establishing a new, separate IRA to hold the inherited funds -- and there's also another.

After the surviving spouse establishes the new IRA, he will own two IRAs -- his own old IRA, plus the new IRA with the children as beneficiaries.

The surviving spouse's minimum required annual distribution will be based on the combined balance in both IRAs. But he does not have to take distributions from both IRAs each year. In fact, doing so will deplete funds in the new IRA that benefits the children, while helping preserve the funds in the old IRA -- which must be liquidated and taxed on the surviving spouse's death.

Better: The surviving spouse's full minimum required annual distribution can be taken from his own old IRA, leaving the new IRA untouched.

That way, only the old IRA that must be liquidated anyway on the surviving spouse's death is depleted -- and the new IRA that benefits the children is left totally intact to grow for their benefit.

Flexibly providing for spouse and children. Before reaching April 1 of the year following the year in which you turn age 70 ½, you should divide your IRA assets into two IRAs -- one with your spouse as beneficiary and the other with a child as beneficiary.

Later, if your spouse seems adequately provided for (by insurance or otherwise), you can take all your IRA distributions from the IRA with your spouse as beneficiary to leave more for the children -- who again may receive decades of benefits.

But if it seems your spouse may need extra funds, you can take all distributions from the IRA with the children as beneficiaries to leave more for your spouse.

Point: You can use the same strategy with several IRAs set up for children, grandchildren, or other beneficiaries.

But if you don't create the separate IRAs by April 1 of the year following the year you turn age 70 ½, and it turns out your spouse won't need the IRA funds, you won't be able to flexibly shift IRA funds to the children or others in this manner -- and a big opportunity may be lost.

Managing broad family bequests. By setting up separate IRAs that each have a different child, grandchild, or other person as beneficiary, you can fund each IRA with an appropriate amount for the beneficiary's particular needs.

Example: You may place a smaller amount in an IRA with a grandchild as a beneficiary than in one with a child as a beneficiary, because of the extra years of IRA earnings that the younger grandchild will expect to receive.

By having a separate IRA for each beneficiary, each can take future distributions from the IRA using his own life expectancy. In contrast, if you name several beneficiaries to a single IRA, all may be required to take distributions using the life expectancy of the oldest beneficiary -- or else go through the difficult process of breaking up the IRA into separate IRAs.

If the needs of your beneficiaries change over time, you can transfer funds among IRAs. After you begin taking distributions, you can adjust the amount in each IRA by choosing from which you'll take distributions.

Taking penalty-free early distributions. If you have two or more IRAs, one of which was inherited, you have a special opportunity to take penalty-free early distributions.

Key: The 10% penalty on distributions taken before age 59 ½ does not apply to funds in an IRA that you inherit as a beneficiary.

That's good enough -- but with planning, you will be able to take funds from both IRAs before age 59 ½ without penalty.

How: Even if you are under age 59 ½, you will be required to take minimum IRA distributions due to your ownership of the inherited IRA funds. But you do not have to take them from the inherited IRA -- you can take them from either IRA.

Strategy: Take the required distributions on the inherited IRA from your own IRA. Because distributions from an inherited IRA are required, they will be penalty free, even if taken from your own IRA. That will leave the funds in the inherited IRA untouched -- and you can take all of them penalty free any time you wish.

Payoff: Each year you will find yourself with a larger amount accumulated in the inherited IRA -- all of which you can withdraw at any time, penalty free.

Managing investments. You may find it easier to fund different IRAs with different kinds of investments, depending on the particular investment expertise of different IRA trustees -- such as banks, brokers, mutual fund companies, etc.

Before you begin taking required distributions, you can rebalance your portfolio periodically with IRA-to-IRA transfers.

After you start taking distributions, you can take all of them from one IRA with investments you want to liquidate... while leaving more promising investments in other IRAs intact.