IRAs for spouses — A financial umbrella for two

It doesn’t matter the circumstance. Whether you’re staying at home to raise the kids, working without employer coverage, or taking extended leave while your spouse takes on the expenses, you don’t have to stop saving for retirement during a career hiatus. If your spouse has access to an employer-sponsored retirement plan and you don’t, you may be able to make a contribution to a Traditional or Roth Individual Retirement Account (IRA). 

Eligibility Requirements:

To make a spousal IRA contribution, you must meet the following IRS requirements:

• You must be married.
• You must file a joint federal income-tax return.
• You must have joint compensation or earned income of at least the amount you contribute to your IRAs.

If you meet the IRS’s requirements, there are some key benefits to be had:

• You can contribute to a Traditional IRA, and all or part of your contributions may be tax-deductible depending on your income level.
• If you are below the income limitations, you and your spouse could contribute to a Roth IRA. Withdrawals are tax-free, provided you’ve had the IRA for five years and reach age 59½.
• The maximum annual contribution for spouses under age 50 is $6,000 for tax year 2021.
• For spouses 50 or older, it’s $7,000 for tax year 2021.
• You can contribute any amount up to these yearly maximums in a given year.
• Used with other types of retirement savings plans, this type of IRA can help your financial strategy stay on track.