This article has been updated for the 2022 and 2023 tax years. I’m willing to bet that most readers of this article have heard of a “spousal IRA”, but very few know exactly what it is or how it works. In reality, however, spousal IRAs are actually quite simple.
Those who are married should get to know what a spousal IRA is, as it has the potential to supercharge their retirement savings and decrease tax liability (depending on IRA type), which may even push a married couple into a lower tax bracket. So, let’s cover the basics.
What is a Spousal IRA?
A spousal IRA is a regular IRA in the name of a low-income or no-income spouse (e.g. a stay at home caregiver, a student, or an unemployed individual). That IRA can be contributed to with income made by the income-earning spouse (who can also contribute to their own IRA as well).
Spousal IRAs are not a different type of IRA. A spousal IRA can be a Traditional IRA or a Roth IRA. And they share all of the same IRS contribution limits, employer-sponsored plan restrictions, income limits, and other rules as regular IRAs.
It’s worth noting that a spousal IRA is not jointly owned either – it is still owned by one half.
In fact, the name “spousal IRA” is a bit of a misnomer. There really is no “spousal IRA account”. It would be more appropriate to refer to the whole thing as “an IRA contribution made with your spouses income”.
How is a Spousal IRA Beneficial?
Typically, an individual must have earned income in order to contribute to an IRA. If you are unemployed and don’t earn income in a particular year, this means that you cannot make IRA contributions. That is, unless, you have an IRA opened in your name and you use your spouse’s income to makes a contribution. This would allow you to jointly contribute up to double the annual IRA contributions of one income earning individual.
Spousal IRA Eligibility
To be eligible for a spousal IRA contribution, the following must be true:
- marital status: married
- tax filing status: married filing jointly (one of the reasons why married filing jointly is typically better than married filing separately)
- age: there is one noteworthy contribution quirk – the non-working spouse must be under age 70.5 at the end of the year, in order to have a contribution made on their behalf to a Traditional IRA. Roth IRAs have no age limit for contributions.
- contribution amount: equal to or less than you and your spouse’s combined earned income for the year.
What is the Maximum Spousal IRA Contribution?
The same maximum IRA contribution amounts apply for each individual, which is a maximum of $6,000 in 2022 ($7,000 if age 50 or older) and $6,500 in 2023 ($7,500 if age 50 or older).
This means that the total combined contributions that can be made for the year to your IRA and your spouse’s IRA can be as much as:
- 2022: $12,000 ($13,000 if only one of you is age 50 or older or $14,000 if both of you are age 50 or older)
- 2023: $13,000 ($13,500 if only one of you is age 50 or older or $15,000 if both of you are age 50 or older)
However keep in mind that you cannot contribute more than you and your spouse’s combined earned income for the year.
What is the Spousal IRA Contribution Deadline?
The spousal IRA contribution deadline is the same as the regular IRA contribution deadline – which is the tax deadline for that calendar year (April 15 or next non-Friday, non-holiday weekday).
How do I Start a Spousal IRA?
You or your spouse can open an IRA in your own name at any discount broker.