Spousal IRA
A spousal IRA is a traditional or Roth IRA funded on behalf of a non-working or lower-earning spouse, allowing a married couple filing jointly to contribute to IRAs for both spouses based on the working spouse's earned income even if the non-working spouse has little or no income of their own.
The general IRA contribution rule requires that an individual have earned income (wages, self-employment income, or other compensation) at least equal to the amount contributed to an IRA in a given year. For households where one spouse does not work or earns less than the annual contribution limit, this rule would restrict or eliminate contributions to that spouse's IRA. The spousal IRA exception, codified in IRC Section 219(c), addresses this by allowing married couples filing jointly to treat their combined earned income as the basis for both spouses' contributions.
For 2024, the annual contribution limit for an IRA is $7,000 per person, with an additional $1,000 catch-up contribution for individuals aged 50 or older. A married couple in which only one spouse works can therefore contribute up to $14,000 in total — $7,000 to the working spouse's IRA and $7,000 to the non-working spouse's spousal IRA — provided the working spouse's earned income equals or exceeds that combined amount. If the working spouse is 50 or older, they can contribute $8,000 to their own IRA; if the non-working spouse is also 50 or older, an additional $8,000 can go to the spousal IRA.
The spousal IRA can be either a traditional IRA or a Roth IRA, and the two accounts need not be the same type. The choice between traditional and Roth for each depends on the couple's current and expected future tax rates, eligibility for Roth contributions based on modified adjusted gross income (MAGI) phase-out rules, and estate planning goals. The deductibility of traditional IRA contributions also depends on whether either spouse is covered by a workplace retirement plan and the couple's MAGI.
A spousal IRA is owned solely by the non-working spouse — it is not a jointly owned account. The non-working spouse controls the account, names the beneficiary, and makes investment decisions independently. This ownership structure has important implications for estate planning: if the working spouse predeceases, the surviving non-working spouse already has their own IRA assets, which are not subject to the more restrictive inherited IRA distribution rules that would apply if the assets were inherited.
Contributions to spousal IRAs must be made by the tax filing deadline for the year, including extensions (typically October 15 of the following year for individuals who file for an extension). The IRS distinguishes between the contribution deadline and the extension-to-file deadline — contributions must be made by the original April 15 deadline unless the extension is specifically a contribution deadline extension, which is only available in certain circumstances such as disaster relief declarations.