Are Spousal IRA Contributions Right for Your Situation?


Did you know that even if your spouse doesn’t have any earned income, you can establish and contribute to his or her IRA. This is a simple but potentially powerful financial planning opportunity. This comes as a surprise to many because they believe that each taxpayer has to have their own earned income. This is one of the many financial planning perks of marriage.

What It Looks Like

In 2019, those who are under age 50 can contribute up to $6,000, while those age 50 or over can contribute up to $7,000. The IRA contributions cannot exceed the total earned income of the working spouse. Here’s an example of how this could play out:

A husband works and earns $100,000 this year. After he maximizes his contributions to his 401(k) plan, he can establish and fund IRAs for himself and his wife. If he’s under 50, he can contribute $6,000 to each IRA. 

Benefits of Spousal IRA Contributions

You’ll need to talk with your financial advisor or tax planner to evaluate whether your contributions will be tax-deductible. A tax deduction is certainly a benefit, but even without one, you may still want to do it. Those non-deductible IRA contributions will lay a foundation in an IRA that you can later use to convert to a Roth IRA — one of the most powerful retirement savings tools. 
Want to learn more about IRA options? Here are tips for a Child IRA.

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