What You Need to Know About Spousal IRA

Retirement planning is important for every family, but it becomes especially crucial when one spouse earns little or no income. In these situations, a spousal IRA can be a powerful yet often overlooked tool to help both partners save for the future.

A spousal IRA is not a distinct account type but refers to using a traditional or Roth IRA for a specific strategy. It permits a working spouse to make contributions to an IRA for their non-working or low-income spouse, as long as they file a joint tax return. If the working spouse earns enough to cover both individuals' contributions, each spouse may contribute to their own IRA to accumulate tax-advantaged retirement savings.

2025 Contribution Limits

In 2025, individuals under 50 can contribute up to $7,000. Those 50 and older may add $1,000 more, for a total of $8,000. Couples can contribute $14,000 or $16,000 with catch-up contributions, even if only one earns income.

This approach is useful when one spouse steps away from paid employment to manage family responsibilities and otherwise, without a spousal IRA, they wouldn’t be able to contribute to a retirement account. This strategy helps both spouses stay on track for retirement and promotes greater financial balance in the household.

Using a Traditional vs. Roth Spousal IRAs

Spousal IRAs can be either traditional or Roth, depending on your income and goals. Traditional IRA contributions may be tax-deductible; however, deductions can be limited if one spouse has access to a workplace retirement plan.

Roth IRA contributions use after-tax dollars and allow for tax-free withdrawals during retirement. In 2025, couples with a modified adjusted gross income (MAGI) under $236,000 can make the maximum contribution to a Roth IRA, with contributions phasing out at $246,000.

*** Note:  Roth IRAs are not subject to required minimum distributions (RMDs) during the original owner’s lifetime, unlike traditional IRAs.

Getting Set Up

Setting up a spousal IRA is simple. The account should be in the non-working spouse’s name, with contributions made by the tax deadline (usually April 15). Most institutions offer easy online setup or assistance from a financial advisor like VAAS.

A spousal IRA helps both partners save for retirement, regardless of employment. With increased contribution limits in 2025, consider this option. Contact your VAAS Pro Advisor for tailored retirement and tax advice.

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