What Is a Spousal IRA? Definition, How It Works, and Contributions [View all]

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.

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