Spousal IRA

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Spousal IRA

The spousal IRA creates tax-advantaged retirement savings opportunities for a nonworking spouse. In a spousal IRA, the employed spouse may contribute to a spousal IRA for the nonworking spouse without having to fund his or her own IRA. A spousal IRA may be either a traditional or Roth IRA.

As of 2011, if the employed spouse is an active participant in an employer-sponsored plan and the other spouse is not, the nonworking spouse may generally deduct a full $5,000 contribution to a traditional IRA. This is allowed if the combined adjusted gross income (AGI) for the couple is at least $5,000 and does not exceed $166,000.

Also, if your spouse is age 50 or older, you may be able to contribute an additional $1,000 each year.

Phased-Out Contributions

Maximum contributions are reduced out for married couples with a joint AGI between $166,000 and $176,000.

Depending on whether you choose a traditional or Roth IRA for your spousal IRA, all the appropriate rules and restrictions mentioned earlier will apply.

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