A spousal IRA is a type of individual retirement account (IRA) that is designed to allow a married couple to contribute to two separate IRAs, even if one spouse does not have earned income or has earned income below the contribution limit.
With a spousal IRA, the working spouse can make contributions to an IRA in their own name and also make contributions on behalf of their non-working or low-earning spouse, up to the annual contribution limit (in 2021, the limit is $6,000 per year, plus an additional $1,000 catch-up contribution for individuals age 50 and older).
A spousal IRA can be either a traditional IRA or a Roth IRA, depending on the couple’s preferences and financial situation. Both types of spousal IRA offer tax advantages and can provide a valuable retirement savings option for the non-working or low-earning spouse.
One important consideration for spousal IRAs is that there are eligibility requirements for making contributions. The working spouse must have earned income equal to or greater than the contribution amount, and the couple must file a joint tax return. In addition, there are income limits for Roth IRAs that may affect the couple’s ability to contribute.
Overall, a spousal IRA can be a useful tool for married couples who want to maximize their retirement savings and take advantage of tax-deferred or tax-free growth potential.
