Traditional IRA

Posts Tagged ‘spouse ira’

The Spousal or Spouse IRA is one of the topics that confuses many IRA owners, including Traditional IRA owners. The subject of spouse IRA should be addressed early on when you open the IRA account. Your spouse may need to access to the IRA you open. If your IRA beneficiary is not your spouse, the subject of a non spouse IRA rollover should be understood. If your spouse dies, IRA hardship withdrawal may be necessary. In general, know that your spouse can open an IRA known as a spousal IRA and make sure your spouse know how to get access to your IRA if necessary. If the concept of how a spouse get access to IRA is not clear, your spouse may have a problem later on.

My spouse does not work, can he or she open a spouse IRA?

Yes. Even if your spouse does not work and has no income or Compensation, your spouse can still open an IRA, usually a Traditional IRA. When your non working spouse opens an IRA using your income or Compensation to qualify, the spouse IRA is referred to as a spousal IRA. The concept that a nonworking spouse can open an IRA based on the working spouse ’s income or Compensation is not often explained when you open an IRA account whether it be a Traditional IRA, Roth IRA, or SEP IRA.

Spousal IRA contribution limits

A non working spouse can open a spousal IRA based on the working spouse ’s income or Compensation. However, the non working spousal IRA contribution limits are the same as the working spouse ’s IRA contribution limits. That means if your Traditional IRA contribution limit is $4,000 a year then your spouse can also contribute $4,000 a year (more if he or she is over 50) to his or her spousal IRA account. That means, as a family, you and your nonworking spouse can contribute $8,000 altogether in total to your IRA account and the spousal IRA account.

Deductible spousal IRA contributions

If your non working spouse opens a Traditional IRA account using your earned income as qualification, he or she can deduct the spousal IRA contributions if your do not participate in another qualified retirement plan such as a 401k plan at work or if your income is below a certain amount set by the IRS. You can claim these spousal IRA contributions as adjustment to gross income whether you itemize your other tax deductions or not.