Spousal IRA


A spousal IRA is a type of individual retirement account that allows a working spouse to contribute to a nonworking spouse's retirement savings. This creates an exception to the provision that an individual must have earned income to contribute to an IRA. The working spouse's income, however, must equal or exceed the total IRA contributions made on behalf of both spouses.


To qualify to make spousal IRA contributions, the couple also must file a joint tax return. Spousal IRAs can be either traditional or Roth IRAs, and are subject to the same annual contribution limits, income limits and catch-up contribution provisions as traditional and Roth IRAs. While IRAs cannot be held jointly in both spouse's names, spouses can share their account distributions in retirement.

How Spousal IRAs Work

The IRS has extensive rules on how IRAs must be structured; the spousal rule adds some implication to these. In general, anyone who wants to open an IRA must follow these rules:  For 2018, "if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $101,000 but less than $121,000 for a married couple filing a joint return or a qualifying widow(er); more than $62,000 but less than $72,000 for a single individual or head of household, or less than $10,000 for a married individual filing a separate return."

In addition, "If you are married and your spouse is covered by a retirement plan at work and you aren’t, and you live with your spouse or file a joint return, your deduction is phased out if your modified AGI is more than $186,000 (up from $184,000 for 2016) but less than $196,000 (up from $194,000 for 2016). If your modified AGI is $196,000 or more, you can’t take a deduction for contributions to a traditional IRA."

Here's how the spousal provision works, according to the IRS: "If you file a joint return and your taxable compensation is less than that of your spouse, the most that can be contributed for the year to your IRA is the smaller of the following two amounts. $5,500 ($6,500 if you are age 50 or older). The total compensation includible in the gross income of both you and your spouse for the year, reduced by the following two amounts.
Your spouse's IRA contribution for the year to a traditional IRA. Any contributions for the year to a Roth IRA on behalf of your spouse. This means that the total combined contributions that can be made for the year to your IRA and your spouse's IRA can be as much as $11,000 ($12,000 if only one of you is age 50 or older, or $13,000 if both of you are age 50 or older)."

Spousal IRAs are offered by IRS-approved institutions including banks, brokerage companies, some credit unions as well as Federally insured savings & loan associations. Investopedia's Best Brokers for IRAs allows you to compare brokers side-by-side to find the one that matches your investing needs.