Spousal IRA

The spousal IRA is not a distinct account type — it is a standard IRA (Traditional or Roth) that can be contributed to under a special exception to the general rule requiring the account owner to have earned income equal to or greater than the amount contributed. Normally, IRA contributions cannot exceed the contributor's taxable compensation. The spousal IRA rule, codified in IRC Section 219(c), permits a married couple filing jointly to base the non-working spouse's IRA contribution on the working spouse's income, as long as the couple's combined earned income is at least equal to their total IRA contributions.

The practical significance is substantial. A stay-at-home parent, a spouse on medical leave, or one who has retired early can still build their own tax-advantaged retirement savings through an IRA, funded by the working spouse's income. Each spouse maintains their own individually owned IRA — assets in a spousal IRA belong solely to the spouse for whom it was established and are not jointly owned. In a divorce, the spousal IRA account is the property of the named owner, unlike a 401(k) which would require a QDRO to divide.

For the spousal IRA to be used, the couple must file a joint federal tax return for that year. Married Filing Separately status eliminates eligibility. The working spouse must have earned income (wages, salaries, self-employment income, alimony received under certain pre-2019 divorce agreements) at least equal to the total combined IRA contributions being made for both spouses. Eligible forms of compensation include W-2 wages and net self-employment income; passive income, dividends, and interest do not count.

Contribution Limits: The spousal IRA follows the same contribution limits as any other IRA. For 2025, each spouse may contribute up to $7,000, or $8,000 if age 50 or older (the $1,000 catch-up). A couple where both spouses are 50 or older can therefore contribute a combined $16,000 per year to their IRAs — $8,000 each — funded entirely by the working spouse's earnings. The combined contribution cannot exceed the couple's joint earned income. If the working spouse earns $12,000 and the non-working spouse contributes $7,000, the working spouse can contribute at most $5,000 (the remainder of earned income), even if the statutory limit would otherwise permit $7,000. The deductibility rules for a Traditional spousal IRA follow the same income phase-outs as a regular Traditional IRA: if the working spouse is covered by a workplace retirement plan, the deductibility of both spouses' IRA contributions phases out at the same modified AGI thresholds that apply to covered workers.

Roth vs Traditional Spousal: The choice between a Roth and Traditional spousal IRA follows the same general framework applied to any IRA decision. If the household's current marginal tax rate is expected to be lower than the rate in retirement, Traditional contributions offer an upfront deduction that provides immediate tax savings. If the couple expects higher taxes in retirement — or if their income is low enough to qualify for the Roth income limits but they prefer to maximize tax diversification — a Roth spousal IRA is often preferable, as it grows and distributes tax-free and avoids RMDs during the owner's lifetime. For 2025, Roth IRA contributions phase out for married filing jointly between modified AGI of $236,000 and $246,000. Above $246,000, the non-working spouse cannot contribute directly to a Roth IRA, but the backdoor Roth strategy (non-deductible Traditional contribution followed by conversion) remains available regardless of income. A couple maximizing both a spousal Roth IRA and the working spouse's own Roth IRA, combined with 401(k) contributions, can accumulate a well-diversified mixture of pre-tax and tax-free retirement assets over a career.