Learn Retirement Savings for your Non-Working Spouse.

Saving up for retirement is one of the most important things that a working individual must plan for in the future. IRAs or Individual Retirement Accounts have long been used by most Americans to save up their money so that when they retire, they have enough to enjoy life. For married couples, establishing a Spousal IRA is probably the best thing that they can do so that they have some money allotted for their retirement.

A Spousal IRA is similar to the traditional IRA in a way that a spouse that is presently working can contribute to his or her spouse’s IRA account. It is generally set-up that way so that one spouse, or whoever earns more and almost all of the income, can contribute to the account. And to avoid further confusion, in no way is a Spousal IRA a special type of retirement savings account; it is just a description that this IRA is a non-working spouse’s account. 

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To contribute to a Spousal IRA, one of the couple, either the working or non-working must meet the following criteria:

  1. The couple must be married at the end of every tax year
  2. They must have filed a joint federal income return for the tax year on when the contribution is made
  3. The spouse who is working must have a taxable compensation on when the contribution is made
  4. If for instance that the non-working spouse has a taxable income, it generally must be less than the other spouse’s working income

For the couple that has a Roth IRA, they must have a Modified Adjusted Gross Income (MAGI) of no less than $176,000 to be eligible to contribute to a Roth IRA.

If the couple satisfies the all the requirements mentioned, then they may be able to contribute $5,000.00 dollars to the Spousal IRA. If the spouse who is currently not working is at the age of 50 and above, then the contribution amount can go up to at least $6,000.00

In computing for the actual amount to contribute to a non-working spouse’s IRA, the amount contributed will depend on the following:

  1. The Joint Modified Adjusted Gross Income Account.
  2. The status on whether the non-working spouse actually contributes to the account.
  3. The age of the non-working spouse will also be a factor in the contribution.

Is it Tax Deductible?

In determining whether your IRA contribution is tax deductible is generally the same whether you contribute to your IRA account or to your spouse’s IRA.  Tax deduction depends on several factors such as:

  1. Filing of Tax Status
  2. Modified Adjusted Gross Income
  3. The amount contributed
  4. Retirement options sponsored by the employer

Setting up a Spousal IRA is not really a different process compared to the regular IRA account. It is the same type of IRA account with only a different contributor either from the working spouse or the non-working spouse. And other variables such as Tax Deductibility will depend on the amount of IRA contribution by the married couple.