What are the requirements for making spousal IRA contributions?

A spousal IRA is an excellent option for employed spouses to contribute to an individual retirement account on behalf of a spouse that has little to no income. Many IRS-approved financial institutions such as banks, brokerage companies, and credit unions offer these plans. Spousal IRAs can be either a traditional or a Roth IRA.

Spousal IRA contribution requirements
Couples must file a joint tax return to qualify for spousal IRA contributions. There are many laws in place regarding spousal IRAs deployment and maintenance. The total amount of contributions can’t be more than the taxable income filed on the joint tax return. If neither spouse has a retirement plan through their job, all donations made to the spousal IRA will be deductible.

Usually, unemployed individuals are not allowed to contribute to an IRA, but there are exceptions if they have an employed spouse willing to commit to an IRA on their behalf. The contributing spouse must be married and have a joint income tax return filed. The spouse with earned income also must have earned enough to compensate for the unemployed spouse. For all IRA’s you must have earned income to contribute no matter your age.

Roth IRAs vs. traditional IRAs spousal contribution
The terms for spousal IRA contributions are also different for Roth IRAs and traditional IRAs when it comes to income. For example, there is no income limit for spousal IRA contributions with a traditional IRA, but there are income limits set in place for those making spousal IRA contributions to a Roth IRA. For married couples that make up to $189,000, the yearly contribution limit is $6,000 and $7,000 for those over 50 years of age. Married couples that make over $199,000 do not qualify for spousal contributions to a Roth IRA, but they are still eligible to make spousal contributions to a traditional IRA.

If you or someone you know is considering contributing to a spousal IRA, make sure you have reviewed the different eligibility requirements for a Roth IRA and a traditional IRA. For more education, reach out to Quest Trust Specialist. For advice, reach out to a CPA or Financial Advisor.

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