A spousal IRA is set up and managed by an individual in the name of a spouse. This type of account was created to allow an individual with little or no income to receive IRA benefits through a spouse. This can increase the retirement savings of the couple through tax deductible contributions.

Benefits of a Spousal IRA

The main goal of a spousal IRA is to increase the tax deductible retirement contributions a person can make if that person is responsible for another party upon retirement. For example, a stay-at-home parent cannot save for his or her retirement without assistance. The working parent needs to save for two people rather than one, and he or she must increase retirement savings in order to do so.

Spousal IRA Eligibility

Any married person who is eligible to set up an IRA can set an IRA up for a spouse. However, there are limits to how much a married couple filing jointly can save each year through tax-deductible contributions. The couple must stay below this threshold annually, even with the second IRA, in order to continue to receive tax benefits on the account. The limit on the spousal account should be the same as that on the regular IRA account.

What are the spousal IRA contribution limits?

As of 2009, the spousal IRA contribution limit was set as the lesser of

  1. $5,000 annually for those under 50, $6,000 for those over 50 OR
  2. the total taxable compensation for both you and your spouse during the calendar year, adjusted for
  • your spouse's IRA contributions and
  • any contributions to a Roth IRA on behalf of your spouse

This generally means the total IRA contribution two individuals filing jointly can make on a tax-free basis is $10,000, $11,000 if one person is over 50, or $12,000 if both people are over the age of 50. 

What are the spousal IRA eligibility requirements?

To contribute to a spousal IRA, the following must be true:

  • You are legally married.
  • You and your spouse are filing a joint tax return.
  • You earned an income this year equal to or greater than the amount you contribute to your IRA accounts
  • The spouse receiving the IRA is under age 70 1/2 in the year the contribution is being made for a traditional IRA. Roth IRA contributions can be made at any age. 

Limits for spousal IRA contributions apply and may affect the total amount the couple can contribute to their combined IRA accounts. Opening a spousal IRA is a favorable idea for any couple in which one party does not earn enough income to contribute independently to an IRA. 

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