Spousal IRAs Explained: Benefits, Contribution Limits, and Usage Examples


A spousal IRA is a unique strategy that allows a working spouse to contribute to an individual retirement account (IRA) in the name of a non-working spouse, providing financial benefits for both partners. This article explains the ins and outs of spousal IRAs, including how they work, contribution limits, and the advantages they offer to married couples.

Introduction to spousal IRAs

A spousal IRA, short for spousal individual retirement account, is a financial strategy that empowers working spouses to contribute to an IRA on behalf of a non-working spouse, even if the latter has no income or minimal earnings. This approach deviates from the standard IRA rules, where an individual must have earned income to make contributions. However, the working spouse’s income must equal or exceed the total contributions made on behalf of both spouses.

Understanding spousal IRAs

Spousal IRAs are essentially regular Roth or traditional IRAs that cater to the specific needs of married couples. It’s essential to note that these accounts are not joint; instead, each IRA is established in the name of an individual spouse. As of 2022, this financial strategy enables couples who are married and filing joint tax returns to contribute up to $12,000 to their IRAs annually. If both spouses are 50 years or older, they can take advantage of the catch-up contribution provision, allowing a combined contribution of $14,000.

In the year 2023, the contribution limit for married couples has increased. They can now contribute up to $13,000 annually or $15,000 if both spouses are eligible for catch-up contributions.

Weigh the risks and benefits

Here is a list of the benefits and drawbacks to consider.

  • Allows working spouses to contribute to an IRA for a non-working spouse.
  • Provides financial flexibility for couples.
  • Enables couples to save more for retirement.
  • Requires couples to file joint tax returns.
  • Subject to annual contribution limits.
  • Contributions may be non-deductible in certain cases.

How a spousal IRA works

For couples to qualify for spousal IRA contributions, they must file a joint tax return, commonly known as “married filing jointly.” Spousal IRAs can take the form of traditional or Roth IRAs and are subject to the same annual contribution limits, income thresholds, and catch-up contribution provisions as standard IRAs.

While IRAs cannot be jointly held in both spouses’ names, they can share the account distributions during retirement. The Internal Revenue Service (IRS) has established extensive rules governing the structure of IRAs and specific guidelines on deploying spousal IRA strategies. According to the IRS, the combined contributions should not exceed the taxable compensation reported on the joint return. For a detailed formula, consult IRS Publication 590-A. In cases where neither spouse participated in a workplace retirement plan, all their contributions may be deductible.

Choosing your spousal IRA provider

Various IRS-approved institutions, such as banks, brokerage companies, select credit unions, and federally insured savings and loan associations, offer spousal IRAs. To make an informed choice, it’s advisable to compare different providers and their offerings to align with your investment needs and financial goals.

Frequently asked questions

What is the maximum contribution limit for spousal IRAs in 2023?

In 2023, married couples who are eligible for catch-up contributions can contribute up to $15,000 to their spousal IRAs. This increased limit provides couples with greater retirement savings potential.

Are spousal IRAs beneficial for non-working spouses?

Yes, spousal IRAs are a valuable financial tool for non-working spouses as they allow them to build their retirement savings, even without earned income. This strategy helps ensure that both partners have financial security in their later years.

Can spousal IRAs be used by same-sex couples?

Yes, spousal IRAs are available to same-sex couples who are legally married. The IRS recognizes these marriages, and the same rules apply regarding contributions and joint tax filing.

Can a non-working spouse open an IRA in their own name?

No, a non-working spouse cannot open a traditional or Roth IRA in their own name if they have no income. Spousal IRAs are designed to allow the working spouse to make contributions on behalf of the non-working spouse. This provides an avenue for non-working spouses to save for retirement, even if they don’t generate income.

Are there age restrictions for contributions to a Spousal IRA?

There are no age restrictions for contributing to a Spousal IRA, as long as the working spouse has earned income that covers the contributions. Even if the non-working spouse is older, the working spouse can make contributions to their Spousal IRA. However, the non-working spouse must adhere to the traditional IRA age limits for taking distributions, which are usually after age 70½.

Key takeaways

  • A spousal IRA enables working spouses to contribute to an IRA for a non-working spouse, even if they have no income.
  • Spousal IRAs are subject to annual contribution limits and require couples to file joint tax returns.
  • For 2023, the maximum combined contribution limit for spousal IRAs is $15,000 for eligible couples.
  • Spousal IRAs offer a unique opportunity for both partners to secure their financial future in retirement.
View article sources
  1. Ticking Time Bombs in IRA Planning for Professionals – Marquette University Law School
  2. Post-Mortem IRA Planning for the Surviving Spouse – Marquette University Law School
  3. Retirement Topics – Internal Revenue Service
  4. What is IRS Form 5498? – SuperMoney