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What Is a Spousal IRA? Definition, How It Works, and Contributions

What Is a Spousal IRA?

A spousal IRA is a strategy that allows a working spouse to contribute to an individual retirement account (IRA) in the name of a non-working spouse with no income or very little income. This is an exception to the provision that an individual must have earned income to contribute to an IRA. However, the working spouse's income must equal or exceed the total IRA contributions made on behalf of both spouses.

Spousal IRAs are just regular Roth or traditional IRAs that are used by married couples. They are not joint accounts; each IRA is set up in the name of an individual spouse. For 2021 and 2022, the use of a spousal IRA strategy allows couples who are married filing jointly to contribute $12,000 to IRAs per year—or $14,000 if they are age 50 or older due to the catch-up contribution provision.

Key Takeaways

  • Spousal IRAs allow working spouses to contribute to an IRA for a non-working spouse.
  • Spousal IRAs are the same as Roth or traditional IRAs but are designed for married couples.
  • Couples must file joint returns to contribute to a spousal IRA.
  • The amount for couples filing jointly to contribute to a spousal IRA for 2022 is $6,000.
  • If you are age 50 or older, you may contribute an extra $1,000 catch-up.

How a Spousal IRA Works

The couple also must file a joint tax return (married filing jointly) to qualify for spousal IRA contributions. 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 spouses' names, spouses can share their account distributions in retirement.

Spousal IRAs allow couples to accelerate their retirement savings. For example, an added $6,000 per year over 30 years at a 5% rate of return can add up to well over $400,000 at retirement.

The IRS has extensive rules on how IRAs must be structured and specific guidelines on how spousal IRA strategies can be deployed. According to the IRS, the amount of your combined contributions cannot be more than the taxable compensation reported on your joint return. See the formula in IRS Publication 590-A. If neither spouse participated in a retirement plan at work, all of their contributions would be deductible.

IRS-approved institutions, including banks, brokerage companies, some credit unions, and federally insured savings and loan associations, offer spousal IRAs, and comparing brokers side-by-side can help you find the one that matches your investing needs.

Special Considerations

For single taxpayers covered by a work retirement plan the phase-out range is $73,000 - $83,000 in 2023, up from $68,000 - $78,000 in 2022.  For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is increased to $116,000 - $136,000 in 2023, up from $109,000 - $129,000 in 2022.

For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range is increased to $218,000 - $228,000, up from $204,000 - $214,000. For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.

For tax year 2022, each half of a couple using a spousal IRA strategy can contribute $6,000, or $7,000 if they are age 50 or older, annually, but contributions must be made by the tax filing deadline for that tax year. In 2023, the limit grows to $6,500 (+ $1,000 in catch-ups).

Article Sources
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  1. Internal Revenue Service. "Publication 590-A (2020), Contributions to Individual Retirement Arrangements (IRAs)."

  2. Internal Revenue Service. "Retirement Topics - IRA Contribution Limits."

  3. Internal Revenue Service. "IRS Announces 401(k) Limit Increases to $20,500."

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