An individual retirement account (IRA) must be established and maintained in only one person's name. Unlike many other types of accounts, it cannot be held jointly.
- Individual retirement accounts (IRAs) can only be in one person's name and can't be held jointly.
- IRA owners can, however, name their spouse as the beneficiary of the account.
- Spouses can also have separate IRAs in each of their names, even if only one of them has earned income, by establishing a spousal IRA.
Naming a Spouse as Beneficiary
While they can't share the account, the IRA's owner may designate their spouse (or any other party) as the beneficiary of the IRA. In some states, the spouse must provide written consent if the IRA owner wishes to designate anyone other than the spouse as the beneficiary. It's important to periodically review beneficiary designations to determine if they need to be updated.
Creating a Spousal IRA
Note, too, that both spouses can have IRAs in their own names, even if only one spouse has earned income, using a vehicle known as a spousal IRA.
To qualify for a spousal IRA, a couple must:
- File a joint income-tax return for the year
- Have earned income or other eligible compensation equal to or exceeding their total contribution to the two IRAs
The non-earning spouse must also be under age 70½ if the spousal IRA is a traditional IRA. No age limit applies to Roth IRAs.
Spouses can fund both their IRAs to the maximum, if at least one of them had that much earned income for the year.
As long as they have sufficient earned income, a couple can fund both of their IRAs to the allowable maximums for that year. In 2019, for example, the maximum is $6,000 for anyone under the age of 50 and $7,000 for those who are over 50. So, depending on their ages, a couple could be able to contribute as much as $14,000 to their two IRAs, effectively doubling their retirement savings for the year.
Spousal IRAs also involve knowing the rules on both tax deductions for traditional IRA contributions and the income limits for Roth IRA eligibility.This will help you measure the tax impact of these decisions and factor it into your planning.
Theodore E. Saade, CFP®, AIF®, CMFC
Signature Estate & Investment Advisors LLC, Los Angeles, CA
An IRA cannot be held jointly by spouses. It can only be held in one individual’s name.
But one workaround, depending on what you’re trying to accomplish, would be to appoint the account-holder’s spouse their power of attorney. When triggered, a limited power of attorney would authorize the spouse to make trades within the account; a full power of attorney would allow the spouse to make withdrawals and transfers from the account as well. You should check with the brokerage firm that is the custodian of your IRA to see if it can accommodate a power of attorneyship; it may require you to fill out a proprietary authorization form.