A spouse who doesn’t earn a paycheck can still build real retirement assets. That’s the power of Spousal IRA contributions: when you file a joint return, the working spouse’s taxable compensation can be used to fund an IRA owned by the non-working spouse—up to the annual IRA limits (for now: $7,000, or $8,000 if age 50+). It’s not a special account type; it’s simply using the spousal rules to fund a traditional or Roth IRA in the non-earner’s name.
Quick note: The information below is educational, U.S.-focused, and “as of now.” Tax rules change—double-check details with the IRS or a qualified pro before you act.
1. Eligibility starts with joint filing and the right kind of income
A Spousal IRA works when you’re legally married and file Married Filing Jointly (MFJ). The couple must have enough taxable compensation (wages, self-employment income, certain taxable alimony, nontaxable combat pay electively treated as compensation, and some graduate stipends) to cover both spouses’ IRA contributions. Investment income (interest, dividends, rents) doesn’t count as compensation. Community property laws don’t change the core rule: each spouse computes their own IRA limits; the spousal exception simply lets the non-earner rely on the working spouse’s compensation. If you file Married Filing Separately (MFS) and lived with your spouse, spousal contributions generally don’t work and Roth eligibility is severely limited.
1.1 Why it matters
Spousal eligibility is the gate you pass through before thinking about Roth vs. traditional, deductions, or phase-outs. Without MFJ (or if compensation is too low), the rest is moot.
1.2 Quick checklist
- Married and filing jointly this year
- Combined taxable compensation ≥ combined IRA contributions
- Non-working spouse’s IRA is in their name (not joint)
- Consider MFS pitfalls and living-with-spouse rules
- Keep pay stubs/W-2s or Schedule C as documentation
Bottom line: If you’re MFJ with sufficient compensation, you’ve cleared the biggest hurdle to fund a spouse’s IRA—now focus on which type (traditional vs. Roth) and how much.
2. How compensation is defined—and where people get tripped up
The IRS uses a precise definition of compensation for IRA purposes. It includes wages, salaries, tips, commissions, self-employment income (after specific reductions), certain taxable alimony under pre-2019 divorce instruments, nontaxable combat pay, and certain taxable graduate/post-doc stipends (post-2019 rule). It excludes investment income, pensions, annuities, deferred compensation, and amounts you exclude from income (e.g., foreign earned income). If the working spouse has a self-employment loss, you don’t subtract that loss from wages when figuring compensation for IRA purposes—a non-obvious guardrail that often surprises sole proprietors.
2.1 Numbers & guardrails
- Self-employed compensation is net earnings minus the plan deduction and half of SE tax.
- Alimony counts only if taxable under pre-2019 rules.
- Nontaxable combat pay counts if elected.
- Fellowships/stipends can count if taxable per Pub. 590-A.
2.2 Mini-case
One spouse earns $45,000 W-2 wages. The other has no earnings. The couple can still contribute up to the per-person IRA limits (subject to phase-outs/deductions), because $45,000 is compensation sufficient to fund both IRAs.
Bottom line: Make sure the “compensation” you’re relying on actually qualifies; don’t count dividends, rental income, or pension payments.
3. Contribution limits and catch-ups—know the caps
For now, the IRA contribution limit remains $7,000 per person; the catch-up for those age 50+ is $1,000, bringing their cap to $8,000. Importantly, the spousal rule doesn’t double the individual limit—it allows each spouse to contribute up to their own limit, as long as combined compensation covers both. There’s no age cap for traditional IRA contributions anymore (the old 70½ rule was repealed). As a result, a retired worker with part-time income can still qualify, and a non-working spouse can still be funded under the spousal rules if the couple files jointly.
3.1 Steps to set your household cap
- Add both spouses’ per-person limits (e.g., $7,000 + $7,000; add catch-ups if 50+).
- Verify combined compensation ≥ combined contributions.
- If compensation is lower, your household cap is compensation, not the combined limit.
3.2 Example
If Partner A (52) and Partner B (47) are MFJ with $90,000 of wages, the max is $8,000 for A + $7,000 for B = $15,000, assuming income/phase-outs allow it.
Bottom line: $7,000 (or $8,000 if 50+) is per person—not per couple. With spousal funding, many households can hit $14,000–$16,000 total.
4. Traditional vs. Roth for a spousal IRA: the big forks in the road
A spousal IRA can be traditional (pre-tax, maybe deductible) or Roth (after-tax, tax-free withdrawals if rules are met). If neither spouse is covered by a workplace plan, traditional IRA contributions are often fully deductible regardless of income. If either spouse is covered, deductibility can phase out based on modified AGI (MAGI) and filing status. Meanwhile, Roth IRA contributions have their own MAGI limits. Choosing between them often comes down to current vs. expected future tax rates, need for flexibility, and eligibility.
4.1 How to decide
- Deduct now (traditional) if you expect lower tax rates in retirement.
- Pay tax now (Roth) if you expect higher future rates or value tax-free growth.
- Check whether a covered-by-plan status applies—this drives traditional IRA deductibility.
4.2 Snapshot of thresholds (high level)
- Traditional IRA deduction (covered spouse, MFJ): phase-out $126,000–$146,000 MAGI.
- Traditional IRA deduction (non-covered spouse, MFJ, other spouse covered): phase-out $236,000–$246,000 MAGI.
- Roth IRA contributions (MFJ): phase-out $236,000–$246,000 MAGI.
Bottom line: Start with eligibility: can you deduct a traditional IRA, or are you eligible for a Roth? Then pick the tax profile that best fits your household.
5. Deduction rules when one spouse is covered by a workplace plan
Here’s the classic spousal scenario: the working spouse is covered by a 401(k); the non-working spouse is not. For now, if the contributing spouse is covered, the MFJ deduction phase-out is $126,000–$146,000. Crucially, the non-covered spouse gets a much higher phase-out: $236,000–$246,000 MFJ. That means many households can still fully deduct the non-working spouse’s traditional IRA even when the working spouse can’t deduct theirs.
5.1 Tips to maximize deductions
- Consider allocating more pre-tax to the spouse who can still fully deduct.
- If the covered spouse phases out, you can still make a nondeductible traditional IRA contribution (track basis!).
- Verify plan coverage (look for the “retirement plan” check box on Form W-2).
5.2 Mini-case
MAGI $160,000 (MFJ); working spouse covered. The covered spouse is beyond the $146k top of their deduction range → no deduction. The non-covered spouse is below $236k, so their traditional IRA may still be fully deductible. Net result: you can often split strategies across spouses.
Bottom line: In mixed-coverage couples, the non-working spouse often preserves the deduction even when the working spouse loses it.
6. Roth IRA income limits for couples—and the special MFS trap
For now, Roth IRA contributions for MFJ start phasing out at $236,000, with no contribution allowed at $246,000+. If you file MFS and lived with your spouse at any time during the year, your Roth phase-out is $0–$10,000—essentially shutting the door for most. If you lived apart all year and use MFS, the single-filer thresholds apply. For many households funding a non-working spouse, the Roth is either fully open or fully closed based on these lines.
6.1 Guardrails
- MFJ MAGI ≥ $246k ⇒ no Roth contribution for either spouse.
- MFS (lived together) MAGI >$10k ⇒ no Roth contribution.
- If Roth is closed, consider traditional IRA (deductible or nondeductible) or a backdoor Roth.
6.2 Example
Household MAGI is $242,000 (MFJ). Each spouse can make a reduced Roth contribution (use the IRS worksheet to compute the exact amount). Over $246,000, Roth is off-limits.
Bottom line: Know where your MAGI falls. These thresholds decide whether your spousal Roth path is open, reduced, or closed.
7. Backdoor Roths for spouses—and the pro-rata rule everyone forgets
If Roth contributions are not allowed because of income, many couples use the backdoor Roth: contribute nondeductible dollars to a traditional IRA, then convert to Roth. Each spouse does this separately; IRAs are always individual. The key tax mechanic is Form 8606, which reports nondeductible contributions and calculates how much of any conversion is taxable under the pro-rata rule. The pro-rata rule aggregates all of an individual’s traditional/SEP/SIMPLE IRAs as one bucket—so large pre-tax balances can make a backdoor Roth taxable. There are no income limits on conversions.
7.1 How to do it (high level)
- Contribute to traditional IRA (nondeductible).
- File Form 8606 to record basis.
- Convert to Roth IRA; pro-rata applies across all your non-Roth IRAs.
- Consider rolling pre-tax IRA money into a 401(k) to reduce pro-rata impact.
7.2 Numeric example
Spouse A has $0 pre-tax IRA money and contributes $7,000 nondeductible, then converts $7,000—taxable income ≈ $0. Spouse B has $93,000 pre-tax IRA money and adds $7,000 nondeductible (basis now $7,000 of $100,000 total). Converting $7,000 later makes ~93% taxable. Same household, very different backdoor outcomes—because the pro-rata rule is individual.
Bottom line: Backdoor Roths can be excellent for high-income couples—but maintain meticulous 8606 records and plan around pro-rata.
8. Timing, deadlines, and recharacterizations—fixing mistakes the right way
You can generally contribute to an IRA for a tax year up to that year’s tax-filing deadline (without extensions). For example, 2024 contributions were due; the same pattern typically applies each year. If you realize you contributed to the wrong IRA type (e.g., Roth when ineligible), you can recharacterize the contribution by the tax deadline, including extensions (often October 15). A recharacterization is a trustee-to-trustee transfer that treats the original contribution as if it had been made to the other IRA type. Conversions cannot be recharacterized (since 2018).
8.1 Mini-checklist
- Confirm prior-year contribution windows (tax day, not 12/31).
- If income changed, consider recharacterization by October 15 with an extension.
- Keep your Form 5498 (arrives by May 31) and 1099-R for records.
8.2 Example
You contributed $7,000 to a Roth for your spouse, then your MAGI rose above the Roth limit. You can recharacterize to a traditional IRA by the extended filing deadline, then decide whether to convert later (note: conversions aren’t recharacterizable).
Bottom line: The IRS gives you a built-in “do-over” for contributions—use it on time and keep the paperwork clean.
9. Opening the account, choosing a custodian, and investing wisely
A spousal IRA is owned by the non-working spouse; it isn’t a joint account. You can open it at most brokerages in minutes. For investing, keep it simple: broad index funds, target-date funds, or a diversified three-fund mix keep fees low and behavior steady. Align risk with the owner spouse’s horizon and temperament. If you already have a 401(k), coordinate asset classes across accounts to avoid unintended concentration (e.g., too much company stock or too much cash). Most custodians issue Form 5498 in May confirming your contributions and 1099-R if any distributions occur.
9.1 Setup steps
- Open a traditional or Roth IRA in the non-working spouse’s name.
- Link a joint bank account for funding and set up automatic transfers.
- Pick a low-cost core allocation (e.g., a target-date fund).
- Name primary/contingent beneficiaries and review annually.
9.2 Cost & paperwork tips
Prefer custodians with no annual IRA fee, commission-free index funds, and clear tax docs. Keep copies of confirmations and the year-end tax forms.
Bottom line: The non-earner’s IRA should be easy to run, low-fee, and coordinated with the rest of your household portfolio.
10. Coordinating with 401(k)s, HSAs, and the Saver’s Credit
Think of household saving as a stack. Grab any 401(k) match first; then consider funding the spousal IRA (traditional or Roth, as eligible). If you have an HSA, its triple-tax advantage often ranks high, too. Lower- and moderate-income couples might also qualify for the Saver’s Credit—which offers a tax credit for retirement contributions up to certain income limits (for now, MFJ limit $79,000). Even when the working spouse maxes the 401(k), a spousal IRA can add diversification, Roth exposure, or future tax flexibility.
10.1 Practical ordering (typical, not universal)
- 401(k) match
- High-interest debt payoff
- HSA (if eligible)
- Spousal IRA (Roth or traditional, based on eligibility)
- Additional 401(k)/IRA to max annual limits
10.2 Example
If cash flow is tight, fund just enough 401(k) to get a full match, then funnel the next dollars to the spousal IRA to keep both spouses building ownership and optionality.
Bottom line: Use the spousal IRA to round out your household’s savings “stack,” especially if you need Roth exposure or want ownership for both partners.
11. Reporting, forms, and recordkeeping (don’t skip this)
Every year, your custodian files Form 5498 by May 31 summarizing IRA contributions and sends Form 1099-R if there were distributions. If you make nondeductible traditional IRA contributions (common in backdoor strategies), file Form 8606 to establish and track basis—that’s how you avoid paying tax twice. If you recharacterize a contribution, your custodian will reflect that on both 1099-R and 5498. Keep confirmations, 5498s, 1099-Rs, and Form 8606 copies indefinitely for clean audit trails.
11.1 Mini-checklist
- Save 5498 each year (arrives in May)
- Save any 1099-R received
- File Form 8606 for nondeductible contributions and conversions
- Keep recharacterization letters/custodian confirmations together
11.2 Common mistakes
Missing 8606, mis-coding recharacterizations, or tossing the 5498 can cause headaches years later when you take distributions or convert to Roth.
Bottom line: Treat IRA paperwork like a passport—store it safely; you’ll need it later.
12. Avoidable mistakes and audit-proof guardrails
Frequent missteps include contributing while not filing jointly, exceeding the compensation cap, ignoring Roth phase-outs, failing to file 8606, or assuming you can recharacterize a conversion (you can’t). Also watch the MFS rules for Roth contributions, and remember that traditional IRAs have RMDs starting at age 73 (Roth IRAs don’t for the original owner). When in doubt, fix errors promptly (e.g., recharacterize contributions by the deadline) and document everything.
12.1 Mini-guardrails
- Confirm MFJ before funding a spousal IRA
- Track MAGI vs. current thresholds
- File Form 8606 for nondeductible contributions/conversions
- Don’t miss RMDs from traditional IRAs at 73+
- Use recharacterization timely to correct contribution type
12.2 Quick example
A couple at $240,000 MAGI (MFJ) funds Roth IRAs for both spouses in January. By year-end, bonuses push MAGI to $250,000—now Roth is ineligible. They contact the custodian and recharacterize to traditional IRAs by the extended deadline and file properly—problem solved.
Bottom line: Most problems are preventable with a pre-funding eligibility check and a tidy paper trail.
FAQs
1) What exactly is a “Spousal IRA”?
It’s not a special account type. It’s the ability to fund an IRA for a spouse with little or no earnings when you file a joint return and have enough taxable compensation. The money goes into an IRA owned by the non-working spouse. Traditional and Roth rules still apply.
2) Do Spousal IRA contributions double our household limit?
They can—per person. Currently, that’s $7,000 each (or $8,000 each if 50+), as long as combined compensation covers both. It’s not $14,000 into one account; it’s up to the per-person limit into each spouse’s IRA.
3) Can we use investment income to qualify?
No. Compensation excludes investment income, pensions, and annuities. Think earned income: wages, self-employment, certain taxable alimony, and more per Pub. 590-A.
4) If my spouse is covered by a 401(k), can the non-working spouse still deduct a traditional IRA?
Often yes. For now, if the non-covered spouse contributes and you file jointly, the deduction phases out at $236,000–$246,000 MAGI—much higher than the covered spouse’s $126,000–$146,000 range.
5) What are the Roth IRA income limits for couples?
For MFJ, Roth contributions phase out $236,000–$246,000. For MFS who lived with the spouse, the phase-out is $0–$10,000. Over the top of the range, you can’t contribute to a Roth that year.
6) Can we switch a contribution from Roth to traditional (or vice versa) if we guessed wrong?
Yes—via recharacterization by the tax deadline (including extensions, commonly October 15). Conversions can’t be recharacterized. IRS
7) How do backdoor Roths work for spouses?
Each spouse can do their own backdoor Roth: make a nondeductible traditional IRA contribution, then convert. File Form 8606. Beware the pro-rata rule: existing pre-tax IRA balances make conversions partly taxable.
8) When are IRA contributions due each year?
By the tax-filing deadline (without extensions) for that year—typically mid-April. For example, 2024 contributions were due. Prior-year contributions are why Form 5498 arrives by May 31. IRS
9) Are there RMDs for spousal IRAs?
Traditional IRAs have RMDs starting at age 73 (for the owner). Roth IRAs don’t have RMDs for the original owner. Beneficiary rules differ.
10) What paperwork should we keep?
Keep contribution confirmations, Form 5498 (arrives by May 31), any 1099-R for distributions, and all Form 8606 filings if you made nondeductible contributions or did conversions. IRS
Conclusion
When one spouse doesn’t earn a paycheck, it’s easy for retirement savings to feel one-sided. Spousal IRA contributions fix that by letting couples use joint taxable compensation to fund a retirement account owned by the non-earner—building autonomy, optionality, and long-term security. The landscape is straightforward: $7,000 per person (or $8,000 at age 50+), with deduction and Roth eligibility determined by MAGI and plan coverage. If Roth doors are closed, backdoor Roths may reopen them—provided you respect Form 8606 and the pro-rata rule. And if you mis-aim, the IRS gives you a recharacterization safety valve through the extended deadline.
Your next steps: confirm your filing status and MAGI, pick traditional vs. Roth for each spouse, set up the non-earner’s IRA, and automate monthly contributions. Keep the paperwork tight—5498s, 1099-Rs, and 8606s—and revisit the plan annually as income or coverage changes. With the rules above, your household can turn a single income into two fully funded retirements—starting this year. Open the non-working spouse’s IRA and set your monthly transfer today.
References
- Retirement Topics – IRA Contribution Limits, Internal Revenue Service. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits
- 401(k) limit increases to $23,500, IRA limit remains $7,000 (IR-2024-285), Internal Revenue Service, Nov. 1, 2024. https://www.irs.gov/newsroom/401k-limit-increases-to-23500-for-2025-ira-limit-remains-7000 IRS
- Publication 590-A (2024), Contributions to Individual Retirement Arrangements (IRAs) — including Internal Revenue Service. https://www.irs.gov/publications/p590a IRS
- IRA year-end reminders for retirement savers, Internal Revenue Service, Dec. 13, 2024. https://www.irs.gov/newsroom/ira-year-end-reminders-for-retirement-savers IRS
- About Form 8606, Nondeductible IRAs, Internal Revenue Service. IRS
- Form 8606 (and Instructions), Internal Revenue Service. and https://www.irs.gov/pub/irs-pdf/i8606.pdf IRS
- Instructions for Forms 1099-R and 5498, Internal Revenue Service. IRS
- About Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., Internal Revenue Service. IRS
- Retirement Plan and IRA Required Minimum Distributions (RMDs) – FAQs, Internal Revenue Service. IRS
- Retirement Savings for Spouses, FINRA. FINRA
- Spousal IRAs help you double your savings, Vanguard. Vanguard
