Key Takeaways
- If you’re looking for an additional way to save for retirement, you may want to consider a spousal IRA.
- Spousal IRAs allow employed individuals to contribute to an IRA for their spouse, if the spouse is not employed.
- There are some limits to the contributions, but a spousal IRA could be a tax deductible, tax deferred method of saving that makes sense for some couples.
Back in 1992, there was a best-selling book written by Dr. Gary Chapman called The Five Love Languages. One of the languages, or ways of expressing and experiencing love, is receiving gifts. The gifts don’t need to be wrapped in fancy gift wrap, but they do need to be thoughtful and meaningful in order to convey love.
This brings to mind a gift of which you might not be aware: the spousal IRA. For married couples, if one spouse is employed and the other is not (or has very little income), the employed spouse may take a portion of their income to contribute to a spousal IRA. The spousal IRA contribution can be up to $6,000 per year, though for those over age 50, the limit is $7,000 per year. Of course, these limits can change over time.
These contributions can be in addition to a 401(k), or in addition to an IRA for the employed spouse. However, the spousal IRA is not a joint account – instead, each spouse has an IRA set up in their individual names. There are also some limits regarding deductions, depending on income levels and whether the employed spouse participates in a retirement plan at work.
If you’re looking to give a meaningful gift to your spouse, a spousal IRA may be a good way to grow your retirement savings in a tax deductible, tax deferred way. What better gift than to be able to retire at a reasonable age and enjoy your retirement together? Until next time, enjoy.