What Is a Spousal IRA & How Do I Use It?

For couples looking to save for two retirements when only one spouse is earning income.

By Motley Fool Retirement Team – Updated Nov 1, 2024 at 2:15 PM

Key Points

A spousal IRA allows one spouse to fund an IRA for the other, even without individual income.
To contribute, spouses must file jointly and meet income limits for Roth or contribute to traditional IRAs.
Contributing to a spousal IRA can significantly increase a couple's retirement savings potential.

You typically need earned income to contribute to an IRA. But for married couples there's an exception: You can contribute to a spousal IRA for a nonworking spouse, up to the maximum annual limit.

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An infographic listing six rules that govern how spousal IRAs work. — Image source: The Motley Fool

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Six spousal IRA rules to know

The regular IRA rules apply to spousal IRAs. After all, this is a plain old Roth or traditional IRA that you're funding on their behalf. Here are the most important rules to be aware of:

Your spouse controls their IRA. Because your spouse owns their IRA, they get to decide what to invest in, even if you funded the account. With an IRA, the owner can invest in the individual stocks and bonds, mutual funds, and ETFs of their choice.
You have to file a joint tax return. A spousal IRA isn't an option for married couples who file separately.
You can contribute to Roth IRAs only if your joint income is within certain limits. The Roth IRA income limits for married couples who want to make the maximum contribution are $230,000 in 2024 and $236,000 in 2025. If you're a higher earner, a backdoor Roth IRA may be an option.
You can contribute to traditional IRAs for you and your spouse regardless of your income. However, depending on your income, you may not be able to deduct the contribution on your taxes if the earning spouse is covered by a retirement plan at work.
You can fund a spousal IRA no matter how old you are. As long as one of you is earning income, a working spouse can continue funding an IRA for a nonworking spouse, regardless of your ages.
Your spouse doesn't have to name you as the beneficiary of their IRA or get your consent to name someone else. Whether the account was funded by the owner or their spouse has zero impact. Leaving the IRA to one's spouse confers a key advantage, though. Under the rules for inherited IRAs, if your spouse transfers their IRA to you when they die, you can roll it over into your own retirement account. The IRS will treat the money as if you were the original owner.

Why choose a spousal Roth IRA?

As a couple, you can effectively double your IRA savings rate, thereby doubling your tax benefits. Plus, funding a spousal IRA is a great way to help your spouse stay on track for retirement while they're out of the workforce, whether they're staying home to care for your children, are unemployed, or are simply choosing not to work.

What Is a Spousal IRA & How Do I Use It?

For couples looking to save for two retirements when only one spouse is earning income.