Spousal IRA: A Tax-Advantaged Contribuiton Option You Might Not Know

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When it comes to retirement savings strategies, some people overlook a valuable opportunity: a lesser-known IRA option that can be particularly beneficial for households where one partner has limited or no earned income.

The spousal IRA is basically an exception to the usual rule that someone must have earned income to contribute to an individual retirement account. This unique feature can double a couple's retirement savings capacity.

However, despite its potential advantages, it's been said that many aren't familiar with spousal IRAs. So, here is more information to get you started.

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What is a Spousal IRA?

The first thing to know is that a spousal IRA isn't a separate type of retirement account. It’s a provision allowing a working spouse to contribute to an IRA on behalf of a non-working or lower-earning spouse.

To qualify for a spousal IRA, couples must be legally married and file their taxes jointly.
The working spouse must earn enough income to cover the contributions for both IRAs.
Like regular IRAs, spousal IRAs can be traditional or Roth.

Spousal IRA rules and contribution limits

The working spouse can contribute to an IRA in the name of the non-working spouse up to the annual contribution limits set by the IRS.

For 2024, the IRA contribution limit is $7,000 per person.
There’s an additional $1,000 catch-up contribution for those 50 and older.
The total contribution cannot exceed the taxable income reported on your joint federal tax return.

It's important to note that the spousal IRA is owned by the person whose name is on the account (e.g., typically the non-working spouse) regardless of who funds the account.

Key tax benefits

Tax-advantaged savings: A primary benefit of a spousal IRA is that it allows an eligible couple to boost their tax-advantaged retirement savings. Even with one income, the couple can contribute to two IRAs, potentially reducing their overall tax burden.

Tax deductions for traditional IRAs: You may be able to reduce your taxable income by deducting the spousal IRA contribution. Eligibility depends on factors such as the IRA type, income level, and coverage under a workplace retirement plan.

Roth IRAs: While contributions are made with after-tax dollars, qualified distributions from Roth IRAs are tax-free.

Potential tax drawbacks

While the tax benefits of a spousal IRA can be significant, there are some potential challenges to consider.

Income limits (Roth IRA): There are income limits on Roth IRA contributions. So, high-earning couples may be ineligible for direct Roth IRA contributions. For 2024, the Roth IRA's full contribution income limit for married couples is $230,000.

Required Minimum Distributions (RMDs): Traditional spousal IRAs are subject to RMDs starting at age 73 (as of 2023). These mandatory withdrawals are taxed as ordinary income.

Early withdrawal penalties: Unless an exception applies, withdrawals from a spousal IRA before age 59½ may be subject to a 10% early withdrawal penalty.

Spousal IRAs: Bottom line

The spousal IRA allows married couples to enhance retirement savings and potentially reduce their tax burden. This is mainly when one spouse has limited or no earned income. By allowing both partners to contribute to IRAs, couples can significantly increase their tax-advantaged savings and build a more secure financial future.

However, like all financial decisions, it's important to consider both the benefits and potential drawbacks in the context of your overall financial situation. Consulting with a financial advisor or tax professional can help determine if a spousal IRA is the right choice for your retirement strategy and how to leverage any tax advantages. Also, see IRS Publication 590-A for more information.

Kelley R. Taylor is the senior tax editor at Kiplinger.com, where she breaks down federal and state tax rules and news to help readers navigate their finances with confidence. A corporate attorney and business journalist with more than 20 years of experience, Kelley has helped taxpayers make sense of shifting U.S. tax law and policy from the Affordable Care Act (ACA) and the Tax Cuts and Jobs Act (TCJA), to SECURE 2.0, the Inflation Reduction Act, and most recently, the 2025 “Big, Beautiful Bill.” She has covered issues ranging from partnerships, carried interest, compensation and benefits, and tax‑exempt organizations to RMDs, capital gains taxes, and energy tax credits. Her award‑winning work has been featured in numerous national and specialty publications.