Spousal IRA: A Strategy for Tax-Advantaged Saving

Nov 15

If you and your spouse both have access to an employer-sponsored 401(k) plan, retirement saving is as easy as specifying the pre-tax contribution amount to be deducted from your paycheck. But for many couples, it’s a little more complicated. The decision may be for one spouse to leave full-time work for a period of time to care for children or parents. Or one spouse may have started a new business that currently doesn’t generate any income.

Lack of an income doesn’t have to mean neglecting tax-advantaged retirement. The IRS has created an exception to the rule that an individual must have earned income to make IRA contributions. It’s called a Spousal IRA.

Contributing regularly can keep retirement savings on track and provide access to tax-free investment growth. If you set up a Traditional IRA, the contribution may be tax-deductible and can lower your tax burden.

The Rules of the Spousal IRA

The spousal IRA... ...