What Is a Spousal IRA? Definition, How It Works, and Contributions

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A spousal IRA is a strategy that allows a working spouse to contribute to an individual retirement account (IRA) in the name of a non-working spouse with no income or very little income. This is an exception to the provision that an individual must have earned income to contribute to an IRA. However, the working spouse's income must equal or exceed the total IRA contributions made on behalf of both spouses.1

Spousal IRAs are just regular Roth or traditional IRAs that are used by married couples. They are not joint accounts; each IRA is set up in the name of an individual spouse. For 2023, the use of a spousal IRA strategy allows couples who are married filing jointly to contribute $13,000 to IRAs per year—or $15,000 if they are age 50 or older due to the catch-up contribution provision. For 2024, couples may contribute up to the new combined limit of $14,000 (or $16,000 after catch-up contributions).12

The couple also must file a joint tax return (married filing jointly) to qualify for spousal IRA contributions. Spousal IRAs can be either traditional or Roth IRAs and are subject to the same annual contribution limits, income limits, and catch-up contribution provisions as traditional and Roth IRAs. While IRAs cannot be held jointly in both spouses' names, spouses can share their account distributions in retirement.1

The IRS has extensive rules on how IRAs must be structured and specific guidelines on how spousal IRA strategies can be deployed. According to the IRS, the amount of your combined contributions cannot be more than the taxable compensation reported on your joint return. See the formula in IRS Publication 590-A. If neither spouse participated in a retirement plan at work, all of their contributions would be deductible.3

IRS-approved institutions, including banks, brokerage companies, some credit unions, and federally insured savings and loan associations, offer spousal IRAs, and comparing brokers side-by-side can help you find the one that matches your investing needs.

https://www.investopedia.com/terms/s/spousal-ira.asp

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1. There's Still a Way to Double Your Retirement Tax Breaks Before Filing

For the 2023 return but I am sure that the number for 2024 can be found
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But here’s an option many filers overlook: a spousal IRA contribution. It can benefit married couples when one partner earns less than the other—or even nothing. Eligible couples can use it to double contributions to traditional individual retirement accounts (IRAs) and deduct $15,000 rather than $7,500 for 2023, as long as they do so by April 15 this year (April 17 in Maine and Massachusetts). Or they can contribute to Roth IRAs with no deduction.

Eligible couples can use it to double contributions to traditional individual retirement accounts (IRAs) and deduct $15,000 rather than $7,500 for 2023, as long as they do so by April 15 this year (April 17 in Maine and Massachusetts). Or they can contribute to Roth IRAs with no deduction.

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Spousal IRA contributions have long been useful to couples when one partner forgoes employment or leaves the workforce temporarily to care for children or an elderly parent. Now many baby boomers are opting in when one spouse is retired and the other still working.

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Spousal contributions to traditional IRAs that are tax deductible bring the benefit of reducing reported income. Given the many phase-ins, phase-outs, and thresholds lurking in federal and state laws, lower income can lead to other savings.

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Be aware of income limits

These can be hairy, so start with the easiest: For 2023, spouses can make full or partial contributions to Roth IRAs if the couple’s modified adjusted gross income is under $228,000. For 2024, that rises to $240,000. Next are income limits for tax-deductible contributions to traditional IRAs. The first question is whether either spouse “actively participates” in a workplace retirement plan like a 401(k).

For a spouse who doesn’t participate married to someone who does, deductibility ends at $228,000 of income for 2023 and $240,000 for 2024. For the active participant, the deduction phases out at $136,000 for 2023 and $143,000 for 2024.

https://www.wsj.com/personal-finance/retirement/theres-still-a-way-to-double-your-retirement-tax-breaks-before-filing-0f689dc1?st=Rbz9Kn&reflink=desktopwebshare_permalink

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