
When it comes to retirement planning, Individual Retirement Accounts (IRAs) are often a key part of the conversation. But what if one spouse doesn’t work or earns little income? That’s where a Spousal IRA can make a major difference. If you’re married and thinking about ways to boost your retirement savings, understanding how Spousal IRAs work could open new financial opportunities for your future together.
What Is a Spousal IRA?
A Spousal IRA isn’t a special type of account—it’s simply a strategy that allows a non-working or low-earning spouse to contribute to an IRA based on the working spouse’s income. Normally, you must have earned income to contribute to an IRA, but this exception helps couples maximize their retirement savings, even if only one person is actively employed.
Both spouses can maintain their own separate IRAs, and each account is in the individual’s name—not jointly owned.
Key Rules and Requirements
Before setting up a Spousal IRA, it’s important to understand the basic eligibility criteria:
- Marital Status: You must be legally married and file a joint tax return.
- Income Requirements: The working spouse must earn enough income to cover both their own contribution and the contribution to the spousal account.
- Contribution Limits: For 2025, each spouse can contribute up to $7,000 to their respective IRAs if under age 50. Those aged 50 or older can contribute an additional $1,000 as a catch-up contribution, totaling $8,000 each.
- Account Type: You can open either a Traditional IRA or a Roth IRA, depending on your income and tax-filing situation.
Traditional vs. Roth Spousal IRA
You have two main options when setting up a Spousal IRA: a Traditional IRA or a Roth IRA. Here’s a quick comparison:
- Traditional IRA: Contributions may be tax-deductible, and taxes are paid upon withdrawal in retirement. Deductibility depends on income limits if either spouse has a retirement plan at work.
- Roth IRA: Contributions are made with after-tax dollars, but withdrawals in retirement are tax-free. Roth IRAs also have income eligibility limits for contributions.
Choosing between the two largely depends on your current tax bracket, expected tax bracket in retirement, and overall retirement strategy.
Why a Spousal IRA Matters
For many families, the non-working or lower-earning spouse often misses out on critical years of retirement contributions. Over time, this gap can significantly impact their financial independence later in life. A Spousal IRA helps:
- Build independent retirement savings for both spouses
- Increase total household retirement contributions annually
- Take advantage of tax benefits—either immediate (Traditional IRA) or future (Roth IRA)
- Empower financial security for the spouse who might otherwise rely solely on their partner’s retirement funds
The power of compound growth over decades can mean a much stronger financial foundation for both individuals in retirement.
Income Limits to Keep in Mind
If you’re aiming for a Roth IRA, income limits will apply. For 2025:
- Roth IRA contributions begin to phase out for married couples filing jointly at a Modified Adjusted Gross Income (MAGI) of around $230,000 and are completely phased out at $240,000.
- Traditional IRAs don’t have income limits for contributions, but deductibility may be reduced or eliminated based on income and whether the working spouse is covered by a workplace retirement plan.
It’s important to check the latest IRS thresholds each year, as these numbers typically adjust for inflation.
Setting Up a Spousal IRA
Opening a Spousal IRA is simple and can be done through banks, brokerage firms, or financial advisors. Here’s what you typically need to do:
- Choose a provider: Compare fees, investment options, and account features.
- Open an IRA in the non-working spouse’s name: Remember, even though the working spouse is funding it, the IRA belongs solely to the non-working spouse.
- Select your investments: Choose a mix of stocks, bonds, mutual funds, or ETFs based on your retirement timeline and risk tolerance.
- Contribute by the deadline: You have until the tax filing deadline (usually mid-April) of the following year to make contributions for the previous year.
Common Mistakes to Avoid
- Assuming it’s a joint account: Remember, each IRA is individually owned.
- Overlooking contribution limits: You must not exceed the combined limit based on income.
- Ignoring income thresholds: Especially for Roth IRAs, your joint income matters.
- Not checking deductibility rules: If you’re contributing to a Traditional IRA, you may not always get a full tax deduction depending on your income and workplace retirement coverage.
Consulting a financial advisor or tax professional can help ensure you maximize the benefits while staying compliant.
Final Thoughts
Spousal IRAs are a smart and accessible way for couples to maximize their retirement savings potential, even if one spouse isn’t working outside the home. With clear rules and powerful tax advantages, this strategy can create lasting financial security for both partners.
Whether you choose a Traditional or Roth option, starting sooner rather than later allows you to take advantage of the power of compounding over time. Don’t miss the opportunity to strengthen your future—a Spousal IRA could be a key piece of your long-term financial plan.