How Spousal IRAs work

By: Kimberly Lankford

It’s much more difficult to save for retirement if you aren’t working. If you’ve taken time off to raise your kids or are in between jobs for any reason, you don’t have the benefit of an employer’s retirement plan to help you build tax-advantaged savings for the future. And if you haven’t earned income from working during the year, you usually don’t qualify to contribute to an IRA, either. However, if your spouse is working but you aren’t, then he or she can contribute to a spousal IRA on your behalf. This can be a great way to boost your retirement savings while you’re out of the workforce. You still have until April 15, 2020, to contribute to an IRA for 2019.

Each person can contribute up to $6,000 to an IRA for 2019 (or $7,000 if you were 50 or older during the year). Even if your spouse is earning just a little bit of money — say, from a part-time job in retirement — he or she can still contribute to a spousal IRA for you in addition to his or her own IRA. The contributions to both IRAs combined just can’t be more than the total amount of money you and your spouse earned from working for the year. If your spouse earned $10,000 from working and you had no income during the year, for example, the total contributions between the two accounts can’t exceed $10,000 — but can be split up however you both decide (up to the annual contribution limit).

You must file your taxes as married filing jointly in order to contribute to a spousal IRA. The IRA can either be a traditional or Roth IRA. Either spouse can qualify for Roth contributions based on your joint income — for 2019, the modified adjusted gross income on your joint return must have been less than $203,000 (the amount of money you can contribute to a Roth starts to phase out if your joint income was more than $193,000). See this IRS table for the details.

Contact the brokerage firm, mutual fund company, bank or other IRA administrator about contributing to a spousal IRA. You generally follow the same procedure as you would for opening and contributing to your own IRA. Each spouse must always own their IRAs separately (there are no joint IRA accounts, whether you are working or not). If you already have an IRA, you can usually add spousal IRA contributions to that account, and you can continue to contribute to that same IRA if you go to back to work later and make contributions based on your own income.

Many people overlook the opportunity to contribute to a spousal IRA, but this can be a great way to help your retirement savings remain on track even if you leave the workforce for a few years.

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