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The spousal IRA: Helping your spouse save for retirement

Spread savings across the household.
Written byMP Dunleavey
MP Dunleavey
MP Dunleavey is an award-winning personal finance journalist and author. For several years she was the Cost of Living columnist for The New York Times, covering real-life financial, behavioral finance, and investing issues. She was also the founding editor-in-chief of DailyWorth.com, the first financial e-newsletter for women.
Fact-checked byNancy Ashburn
Nancy Ashburn
As a 30+ year member of the AICPA, Nancy has experienced all facets of finance, including tax, auditing, payroll, plan benefits, and small business accounting. Her résumé includes years at KPMG International and McDonald’s Corporation. She now runs her own accounting business, serving several small clients in industries ranging from law and education to the arts.
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Table of Contents
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Growing bars graphic with rising arrow, 3d render, progress way and forward achievement creative concept
What the SECURE 2.0 Act means for you and your retirement
Woman making bread rolls on a wooden board on kitchen counter
Job-hopping? Don’t forget to roll: 4 options for rolling over your 401(k)
Notebook with 403(b) vs. 457(b) on the cover in marker
Retirement saving basics: 457 plan vs. 403(b)
Photo of two people contributing to a piggy bank.
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How your spouse can boost your retirement savings.
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It happens: At a certain point—maybe after the birth of a child, a layoff, or an illness—one spouse might have to stop working for a time. The good news is that a hiatus from the workforce doesn’t have to derail that spouse’s retirement savings.

An unmarried person who doesn’t work cannot contribute to an IRA. But thanks to the Kay Bailey Hutchison Spousal IRA Limit, as long as you file a joint tax return, even if one of you has no income, you can consider the household compensation when calculating your IRA contribution amount.

Key Points

  • If your spouse has to stop work, a spousal IRA can help keep your retirement savings on track.
  • The nonworking spouse doesn’t need earned income. But you must be married, filing jointly, and you can’t contribute more than your taxable income combined.
  • The usual IRA contribution limits and deduction rules apply.

What is a spousal IRA and how does it work?

A spousal individual retirement account or arrangement (IRA) is just a regular IRA—the distinction being that its limits and deductibility looks at the household income, rather than the income of the nonworking spouse.

Let’s say you’re the nonworking spouse. You can open and fund a traditional or Roth IRA, as long as you meet the following criteria:

  • You’re married and filing a joint tax return.
  • Your total combined IRA contributions can’t be more than your household taxable income, as reported on your joint return.

If your income has just gone from two to one, setting aside extra money in an IRA may not seem feasible. But given that a period of unemployment can take a big bite out of your future savings, every little bit helps—and having the extra tax deduction (if you set up a tax-deferred spousal account) might also be useful.

What are the contribution limits and deductions for a spousal IRA?

The rules for annual contribution limits, and the amounts you can deduct each year, are basically the same for spousal IRAs as for ordinary IRAs.

Contribution limits. For 2023, you can each save up to $6,500 total per year, or $7,500 if you’re 50 and older. The contribution limits apply separately to each spouse, because IRAs are individual accounts.

So in theory a married couple, filing jointly, could contribute $6,500 per person, per year, to their own IRAs (or $7,500 if they’re 50 or older). That’s $13,000 per year, or $15,000 including the catch-up provision.

Deductions. If the working spouse is not covered by a workplace retirement plan, contributions on behalf of a nonworking spouse to a traditional IRA can be fully deducted from the household income, no matter what the household income.

If the working spouse is covered by a workplace retirement plan, contributions are fully deductible if the household income is below $218,000. Partial deductions are allowed between $218,000 and $228,000 in household income (for the 2023 tax year).

Contributing to a spousal Roth IRA

You don’t have to contribute to a regular, tax-deferred IRA. If one spouse already has a tax-deferred plan, setting up a spousal Roth IRA might be the way to go. You won’t be able to deduct contributions to the spousal Roth IRA, but withdrawals in retirement will be tax free (assuming you’re at least 59 1/2 and have had the Roth account for at least five years).

Roth IRAs do come with income limits, though. For 2023, couples who are married and filing jointly can contribute up to the full amount ($6,500 or $7,500 for those 50 and up) as long as your modified adjusted gross income (MAGI) is below the threshold. If your MAGI is between $218,000 and $228,000, you can contribute a reduced amount. If you earn more than $228,000, you can’t contribute to a Roth IRA (for yourself or for your spouse).

The bottom line

Life happens, and sometimes one half of a working couple has to take time out of the workforce. This can have a significant impact on your retirement savings—but opening a spousal IRA can be a smart way to help keep your nest egg on track.

Granted, an IRA doesn’t let you save as much as a 401(k). But in the absence of a workplace plan, a spousal IRA can at least help fill the savings gap now so your future is a bit more secure.

References