What is a Spousal IRA?

by John Cooney on Nov 18, 2019

Retirement, Roth IRA, IRA, Taxes

One of the requirements the IRS has in place for contributing to an IRA is that the person has to have earned income that is equal to or higher than the amount they are contributing.  What this requirement did not address were those households with only one working spouse.  Thus, the Spousal IRA was born.

What is a Spousal IRA?

  • A Spousal IRA allows an individual with no earned income the chance to contribute to an IRA as long as that individual’s spouse has earned income equal to or greater than the amount of the contribution.

Requirements and Examples

  • The working spouse must have enough income to cover the spouse’s contribution as well as any contribution the working spouse made to their own IRA.
    • Example:  Marie earned $60,000 in 2019 and her husband Bob served as a caregiver to his parents.  Marie contributed $6,000 to an IRA for herself in 2019.  Bob could also contribute $6,000 to his own IRA since Marie’s income ($60,000 minus her own $6,000) exceeds Bob’s contribution.
  • If you are making a Spousal IRA contribution, you must be filing a joint tax return for that year with your spouse.
  • Income limitations do apply that can affect your ability to make a spousal IRA contribution to a Roth IRA or your ability to deduct your contribution to a traditional IRA.  These rules are multi-layered and can often be confusing so I’d recommend talking to a professional to see if they apply to you.  In general, for 2019, if your Modified Adjusted Gross Income is below $103,000, the income limitations will likely not affect you. 
  • You must be married on December 31st of the year in which you make a spousal contribution. 
  • There are no special forms you need to file with the IRS when you make a Spousal IRA contribution.  You also do not need to let your custodian know that it is a Spousal IRA contribution.


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What’s Stopping You?

There are a lot of good reasons why a spouse may not have earned income during the year, but that does not mean that you can’t continue to plan and save for your retirement.  Talk to a financial advisor today to figure out how you can contribute to an IRA and what options are available to you, so that you can continue to invest in your future.

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