Spousal IRA: What It Is, How to Open One

A spousal IRA lets couples save for retirement even if only one spouse works for pay.

Andrea CoombesMar 17, 2021
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IRAs are touted as valuable retirement accounts, but the rules say you have to earn an income to contribute to one, right? Not necessarily.

What is a spousal IRA?

A spousal IRA is an individual retirement account to which a working spouse contributes on behalf of a spouse who earns little or no income. This is an exception to the rule that a person must have earned income in order to contribute to an IRA.

This means that spouses who don't work for pay can contribute to a spousal IRA if they file taxes jointly with a spouse who does. If each spouse has an IRA, both can make the maximum annual contribution limit of up to $6,000 in 2021 ($7,000 if age 50 or older).

How spousal IRAs work

There's no special "spousal" account type. Spousal IRAs are literally just a typical IRA, but used by a person who's married. That is, each spouse can use traditional or Roth IRAs, or both. The key is that the working spouse must earn at least as much money as is contributed to all of the couple’s IRAs.

Say a wife is working, making $100,000 a year, and the husband is not working. She can contribute to her own traditional IRA, up to the maximum, but she can also contribute up to the maximum to her husband’s IRA.

» On track for retirement? Check out our retirement calculator.

Depending on the type of IRA you qualify for, you'll enjoy a tax break either now or in the future (we talk about how to choose between a Roth vs. traditional IRA here). As a bonus, contributing to a retirement account may bring you another break at tax time: The saver’s credit is worth up to $2,000 for married couples who file jointly. Your adjusted gross income must be $65,000 or less to qualify in 2020 and $66,000 or less for the 2021 tax filing season.

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What are the rules for a spousal IRA?

In addition to the requirement that at least one spouse has enough earned income to cover the contributions for both, there are some other rules to consider:

  • The couple must file taxes as “married filing jointly.”

  • IRAs have strict income limits, and those rules apply here. A nonworking spouse can open a traditional IRA or a Roth, but only if he or she qualifies. See this page for income and other limits for both types of IRAs. Note: A spousal IRA is simply an ordinary IRA in the spouse’s name.

  • The spousal IRA is not co-owned. It’s in the name of, and owned by, the nonworking spouse.

  • There is no age restriction on contributing to either traditional or Roth IRAs.

Opening a spousal IRA

If a spousal IRA sounds right for you and your spouse, you can open an account at any leading IRA broker or robo-advisor.

Opening an account is easy: You’ll need to provide some personal information, including birthdate and Social Security number, but that’s about it.

The savings can pay off. Say you put $500 every month into an IRA. If you earn a 6% investment return, you could end up with more than $330,000 after 25 years.

» See our complete roundup of the best IRA providers

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