If one spouse isn't employed, they might be missing out on putting retirement assets in their name—not to mention reducing the tax-deferred growth possibilities as a couple.
That effectively doubles the amount your household can sock away in IRAs (pre-tax or Roth) each year. The only requirement is that the spouse who owns the IRA must have enough earned income to cover both contributions.
How spousal IRAs work
A spousal IRA isn’t actually a separate type of IRA account—rather, it’s just a traditional IRA or Roth IRA set up in the name of a spouse who has little to no income. This may include those who are caregivers for children or other family members, workers who have returned to school, or people who have left the workforce for another reason.
You must file taxes as “married filing jointly.”
There are income-based contribution limits for Roth IRAs and tax deduction limits for traditional IRAs based on your tax filing status. These may affect which type of account you select.
The bottom line
Eligible couples can use a spousal IRA to double their contributions to traditional individual retirement accounts (IRAs) even if only one partner has an income, and deduct a total of $14,000 (rather than $7,000 for the individual income earner) for 2024, as long as they do so by April 15. So there is still time for married couples to make spousal IRA contributions and double their tax-advantaged retirement savings—just be sure to specify which spouse the contribution is for when sending funds to your IRA provider.
With a little planning, a spousal IRA strategy can significantly boost your households' retirement funds. And you can get an immediate tax deduction on your taxes if you make the contributions prior to tax day—so don't leave this tax break on the table.
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