What is the Spousal IRA?

What is the Spousal IRA?

A spousal IRA is a strategy which allows a spouse who is working to contribute to an IRA in the name of the other non working spouse so that the income can be circumvented.  Here the spousal IRA is also called traditional IRA or the Roth IRA. This allows both members of the couple to do savings at once, even though there is only one of them who is working outside of the house.


The spousal IRA is a great way to boost the total retirement savings of the couple. This is especially true in the case in which the spouse who is working has already maxed out his or her own contributions to the retirement of a particular year then in cases like these they can eventually start contributing to the spousal IRA who is not working.  Having a retirement account for any non working couple is quite a good financial decision in terms of future prospects.

So in this way the spousal IRA is nothing but a regular IRA that the married couples can use.  Also, one thing that should be noted here is that these are not joint accounts because here each of the IRA is set in the name of the spouses individually. According to one relevant source, it was found out that, as in 2019, the use of the spousal IRA contributed to $12,000 of the total IRA and in case in which the couples where above the age of 50, it amounted to approximately $14,000. 

Now there are varying tax advantages and it totally depends on whether one chooses to go with traditional IRA or Roth IRA. These IRAs provide future incomes after the couple get retired from their job and are tax free.

Rules of the spousal IRA

The first rule to open the spousal IRA is that the two should be married to each other. Also, they should jointly file the taxes.  Then, next important rule is that the income that the working spouse will be contributing should be equal to the spousal IRA’s contribution. Also in the case in which if the spouse who is contributing has his or her own IRA, then here the income which is taxable should be equal to the total sum of the contributions which are made to both of the IRAs.  In this the individual will be able to contribute more than what they can earn.

Now in case if an individual choose the traditional IRA, then here they will be needed to make a pretax contributions which will be deducted at the time of tax.  This way when the distributions are made, after the retirement they will have to pay income tax on those deductions. But if instead of that that individual chooses to go with the Roth IRA, then they will be making after-tax contributions.  Here they will not need to take RMDs and the distribution that they will be availing in their retirement will not be taxed.

Thus, to establish a spouse IRA is considered to be a great way to make sure that the savings are being made together as a couple.  For the non working spouse it’s a good insurance plan.