What is a Spousal IRA?
A Spousal IRA is a tax-advantaged retirement account designed specifically to allow contributions to be made by a working spouse on behalf of a nonworking spouse. Under current laws, if you are married filing jointly, you can contribute the maximum into an IRA for each spouse even if one of you has no earned income as long as the working spouse has income equal to both contributions. Otherwise, a Spousal IRA is the same as any other IRA. How much can you contribute? The contribution limit for a Spousal IRA is the same as for a regular IRA: $5,000 for tax year 2008. And the catch up contribution is also the same: an extra $1,000 if you’re 50 or older. So you and your nonworking spouse can contribute a total of $10,000 for ’08 ($12,000 if you both qualify for the catch-up) as long as you have an income equal to or greater than the total contribution. Is it deductible? If the working spouse does not participate in a retirement plan at work, the contributions for both spouses are tax-deduc
The spousal IRA rules allow a married person to make an IRA contribution for his/her spouse. A couple can contribute up to 100% of their combined earned incomes or $10,000, whichever is less. The amounts can be divided in any manner between the two IRA’s, as long as no more that $5,000 is contributed to either IRA.
Many families choose to have one spouse stay at home to raise their children, either for a couple of years or permanently. The stay-at-home parent does not have the option of their own employer-sponsored IRA plan, and their lack of income disqualifies them for other IRA options. This is because the maximum amount that can be contributed to an IRA is $5,000 US dollars (USD), or 100% of an individual’s total income, whichever is less. For an at-home spouse with zero income, there is no way to establish their own IRA because 100% of their income is nothing. Fortunately, there is a provision for at-home parents. A spousal IRA lets the working spouse contribute extra money to their own IRA on their spouse’s behalf. The extra savings potential means that both spouses will be covered for retirement. The main difference between a regular IRA and a spousal IRA is that the working spouse’s income is used to determine contribution amounts for both IRAs, not just his or her own. A spousal IRA can
The Spousal IRA is designed for marriage partners who do not have jobs. If your spouse works, you can open a Spousal IRA and contribute up to $5,000 in 2009. (If you are at least 50, you can contribute an extra $1,000 as a “catch up” contribution.) Your spouse must have earned enough income to cover the contribution, and you must be married filing jointly. In a traditional IRA, this contribution is tax deductible. You can also open a Spousal Roth IRA for a non-working spouse, but, as with a “regular” Roth IRA, the contribution is not tax deductible. The advantage of the Spousal Roth IRA is that after age 59.5, and if the account has been open for at least five years, withdrawals are made tax free from the Roth IRA — since contributions aren’t tax deductible, you’ve already paid taxes.
A Spousal IRA is designed to allow a married person to make an IRA contribution for their spouse who may not have earned income. A married couple can contribute up to 100% of their combined income or $10,000, whichever is less. No more than $5,000 can be contributed to each individual’s IRA. • How much can be contributed to a Traditional IRA? You may contribute 100% of your earned income up to $5,000 per year (less any Roth IRA contributions). • What amount is tax-deductible? The amount that is tax-deductible varies depending on marital status, income, and whether you have a retirement plan at work. Please review the guidelines in this brochure or consult your tax advisor to determine how much of your IRA contribution is tax-deductible. • When may funds be withdrawn? You may withdraw funds when you reach 59 1/2 years of age. Because withdrawals are taxed as ordinary income, some people prefer the tax advantage of taking withdrawals in installments. However, you may withdraw the entire
