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Spousal IRA – Does Your Stay at Home Spouse Have an IRA?

by Miranda Marquit

Many stay at home parents accept the fact that they don’t have a retirement account, and rely on a partner to provide in retirement. However, this isn’t necessary. If you are married, and you file taxes jointly, your working spouse can contribute to an IRA in your name. Because of the nature of this type of IRA, it is often referred to as a “spousal IRA.”

Contributing to a Spousal IRA

Spousal IRA Rules, Eligibility, and Contribution Limits

Does your spouse have an IRA?

The point of the spousal IRA is to allow a stay at home partner the chance to save for retirement — in his or her own name. In reality, the spousal IRA is a “regular” IRA; the contributions to the account come from a spouse, though, rather than from the person who actually owns the IRA.

In order to make a spousal contribution to an IRA, the following conditions need to be met:

  • You must be married filing jointly
  • The IRA must be held in the name of the non-working spouse, and that money becomes his or hers (no joint IRAs)
  • Contributing/working spouse must have earned income that exceeds the amount of contributions
  • For a traditional IRA, the non-working spouse must be under 70 1/2 in the year of the contribution (no age requirement for a Roth IRA)

Once you determine that the eligibility requirements are met for the spousal IRA, you can open a spousal IRA and begin contributing. This IRA has the same rules as any other IRA.

Follow the IRA Rules

For the most part, the rules for IRAs apply here: The $5,000 contribution limit (but that’s for each account, so $10,000 total for your IRA and your spouse’s IRA), the catch-up contribution, the income limits for the Roth IRA, and the required minimum distributions that come with age for the traditional IRA.

It is worth noting that tax deductions for contributions to a spousal IRA are a little different. A working spouse that doesn’t participate in an employer-sponsored retirement plan can deduct the entire contribution amount made to a traditional spousal IRA. However, if the contributing/working spouse does have an employer-sponsored plan, the tax deduction isn’t the same. You won’t be able to deduct the entire amount that you contribute to your spouse’s traditional IRA. (It’s a moot point with the Roth IRA, since Roth contributions aren’t tax-deductible anyway.) You can read more about Spousal IRAs in the IRS publication 590.

Opening an Spousal IRA

Opening a Spousal IRA is basically the same as opening any other IRA – you will need to have an IRA custodian such as a bank or investment account. Then you simply fill out some paperwork and make a contribution. Remember, the account is held in the name of the spouse (it’s not a joint IRA), so be sure to use the spouse’s name and Social Security Number. If you don’t already have an IRA, here are some good places to open one.

Give Your Spouse a Good Head Start

There are many women who stay at home, and an increasing number of men that stay at home, while their spouses work. Being a stay at home spouse can lead to financial setbacks, and the sacrifice of earning power. On top of that, there is no monetary compensation for the hard work a stay at home spouse often puts in. It seems only natural that such sacrifice is recognized with a shot at a more stable financial future. On top of that, you can double your IRA contributions as a household with the help of a spousal IRA.

A spousal IRA can be a great tool that helps stay at home spouses save for retirement, while at the same time increasing the tax-advantaged savings potential of the entire household.


Published or updated June 5, 2012.
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{ 3 comments… read them below or add one }

1 Charlotte @ HIMMB

This is great information. I know several young stay at home moms that would really benefit from a spousal IRA. I’ll be sure to pass this post along to them.

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2 Sun

http://www.irs.gov/publications/p590/ch01.html#en_US_2011_publink1000230467

Says here if you make $90k or less, your non working spouse can take the full deduction. Seems to me, if you make more than this, having your spouse actually work would be beneficial. If not for someone else, a business that the working spouse owns and operates… This involves setting up payroll, but seems worth it to be able to take a full deduction vs partial or none.

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3 Ryan Guina

Nice find, Sun. There are some other tax benefits you can take advantage of if you own your own business. For example, you can pay your spouse, and set up a separate retirement fund for him/her, such as a Solo-401k, SEP IRA, Keough, or other self-employed retirement plan. Those are in addition to the regular IRAs, which are available to everyone. That is the territory where it makes sense to speak with a tax pro or financial advisor.

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