What is a spousal IRA?
Learn how you may be able to use a spousal IRA to help save for retirement in the case that you or your spouse may not be earning income or taking time away from work.
A spousal IRA allows an employed spouse to contribute to their non-income earning spouse’s IRA. The spousal IRA can be a Traditional or Roth IRA and is set up in the name of the non-working spouse. This strategy can be useful to help maximize your retirement savings as a couple.
Spousal IRA contribution limits
Are you wondering who can contribute to a spousal IRA? Under current law, most couples can contribute up to $12,000 ($6,000 each) to their IRAs in 2022, as long as their combined compensation is at least $12,000 for the year in which contributions are made. This means that the spouse with lower or no compensation can contribute $6,000 to a retirement plan for 2022. That amount goes up to $7,000 when that person turns 50, and the plan can be set up as either a Roth IRA or a Traditional IRA. For 2023, the limit increases to $6,500 each ($7,500 if age 50 or older).
Spousal IRA income limits
Spousal IRA contributions are reported to the IRS each year on your joint federal income tax return. If you or your spouse is covered by an employer plan, a contribution to a spousal Traditional IRA may be limited for a deduction from federal income taxes. If your spouse is covered by an employer plan, couples can take a full deduction based on their combined modified adjusted gross income. Click a link below to review the amounts based on income:
- Traditional IRA – select the Modified Adjusted Gross Income dropdown and review the Combined Modified Adjusted Gross Income chart.
- Roth IRA – select the Annual Contribution Limits dropdown.
If you can deduct the Traditional IRA contribution, then you will pay taxes on the deductible contribution and earnings when you draw on them in retirement. If you can't deduct the contribution now, then you won't have to pay taxes on the non-deductible contributions in the future.
Even if you can't deduct the spousal IRA contribution, because your family income is too high or because you choose a Roth IRA instead of a Traditional IRA, consider making it anyway to help provide for your family's financial future. Regardless of how you save, anything is better than nothing.
Details on Internal Revenue Service guidelines should be reviewed.
Spousal IRA rules
Here are some Spousal IRA guidelines for you and your spouse to keep in mind:
- Earned income – One spouse must have sufficient income to cover contributions for both parties.
- File taxes jointly – You and your spouse must file taxes as “married filing jointly”.
- No co-ownership – The spousal IRA should be opened in the name of the non-working spouse.
Consider talking to a professional to discuss what type of IRA is best you and your spouse.
