Contributing to Spousal IRAs
A spousal individual retirement account (IRA) allows a nonworking spouse to contribute to an IRA, even though the spouse has little or no earned income. Here are the basics:
- To be eligible to contribute, the couple must be legally married at tax year-end and file taxes jointly. The couple’s combined earned income must equal or exceed the combined IRA contribution.
- Contributions can be made to traditional IRAs as long as the owner is under age 70½, while there is no age limit for Roth IRAs.
- In 2013, the maximum contribution to an IRA is $5,500, with an additional $1,000 catch-up contribution for individuals age 50 and over.
- For traditional IRAs, if the working spouse is covered by a qualified retirement plan but the nonworking spouse is not, the contribution for the nonworking spouse is phased out once modified adjusted gross income (NAGI)
- Is between $178,000 and $188,000. If you both have earned income equal to at least the maximum IRA contribution amount and are both covered by a qualified retirement plan, your contribution is phased out at joint MAGI between $95,000 and $115,000 in 2013. If neither of you is covered by a qualified plan, both of you can make a deductible contribution regardless of your MAGI.
- For Roth IRAs, eligibility is phased out for MAGI levels between $178,000 and $188,000 in 2013. It doesn’t matter whether your spouse is covered by a qualified retirement plan at work.
Contributing to a spouse’s IRA may be as beneficial to the working spouse as to the nonworking spouse, since the assets are likely to be shared during retirement. Please call if you’d like to review whether you or your spouse is eligible to contribute to a spousal IRA.
Copyright © Integrated Concepts 2012. Some articles in this newsletter were prepared by Integrated Concepts, a separate, nonaffiliated business entity. This newsletter intends to offer factual and up-to-date information on the subjects discussed, but should not be regarded as a complete analysis of these subjects. The appropriate professional advisers should be consulted before implementing any options presented. No party assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.