What is a Spousal IRA?

Shari Rash
April 16, 2020
Share this post

Did you know that you can have an IRA account for each spouse even if one spouse doesn’t earn an income?

You need earned income to contribute to an IRA (individual retirement account) but one exception is a Spousal IRA. A Spousal IRA is when one spouse contributes to an IRA on behalf of their spouse. Contribution to a Spousal IRA is a great way to give your household’s retirement savings a potential boost. In 2021, a couple aged 50 and older can contribute $14,000 to their retirement savings!

A Spousal IRA allows one spouse with earned income (taxable compensation) to contribute to an IRA on behalf of their spouse who doesn’t work for pay. As long as the spouse that works for compensation earns as much as the household’s IRA contributions. Taxable compensation includes the following:

  • Wages and salaries
  • Tips and bonuses
  • Commissions
  • Taxable alimony and separate maintenance
  • Self-employment income
  • Nontaxable combat pay

Spousal IRAs can either be traditional or Roth IRAs. Not sure of the difference between the two? Check out my post on Roth IRAs.

Contribution limits for IRAs in 2021 are:

  • Under 50 years of age: $6,000 per person
  • Over 50: $6,000 per person plus $1,000 catch-up contribution per person.

A spousal IRA is not a joint account. It is an individual account, and the non-income earning spouse is the owner, even though the other spouse is funding it. And it is important to note, in case you separate or divorce in the future, that once the money is in the spousal IRA, it now belongs to the IRA owner.

In order to take advantage of a spousal IRA, you must file taxes, married filing jointly.

If at some point in the future, the non-income earning spouse starts earning an income, they can contribute to the spousal IRA with their earned income. But the contribution limits still do apply.

Would you like to set up a Spousal IRA? Give me a call or send me an email!

Related Articles

Retirement Planning 101: A Guide for A Secure Future After Work

Retirement is often seen as the golden years of one's life – a time to relax, travel, pursue hobbies, spend quality time with loved ones, and enjoy the fruits of one's labor. 

What is a Stay at Home Mom's Salary?

As a Financial Advisor for young families my goal is to relieve the burden of managing finances, so they can live the life they want. As a female financial advisor, I want to empower all women when it comes to their finances, whether they work inside or outside of the home.

Does Your Spending Personality Match Your Credit Cards?

I always tell my clients that money is a tool. It is not positive or negative, it does not have emotion. We, as emotional beings, project our own feelings onto money. Whether it is checking your bank account or investing in your company’s 401k, some people face financial decisions head on and others prefer their head in the sand. There is not one “normal” way to manage your finances, but you do need to identify where you fall on the continuum and find what works best for you.
Subscribe to newsletter
Subscribe to receive the latest blog posts to your inbox every week.