What to Know About Spousal IRA

Key facts

  • Couples who are legally married and file a joint tax return are eligible to open a Spousal IRA for the non-working spouse.
  • Spousal IRAs can be opened as a Traditional or Roth IRA account.
  • The income limits, contribution rules, and distribution rules apply to Spousal IRAs.
  • There may be tax benefits to opening a Spousal IRA.

Retirement savings are just as important for non-working spouses as for working spouses. However, because one of the key requirements for contributing to an individual retirement account (IRA) is earned income, there are frequent misunderstandings among non-working spouses about their ability to contribute to retirement accounts. Fortunately, IRS regulations are designed to protect the interests of non-working spouses through the Spousal IRA.

Understanding the Spousal IRA

The Spousal IRA is nearly identical to products designed for individuals with earned income. However, the difference is that a Spousal IRA can be opened on behalf of a non-working spouse using earned income from a working spouse. As long as the working spouse has enough earned income to cover contributions to both accounts, it is possible to make full contributions in both names. Of course, Roth IRA income limits still apply even if the account is opened for a spouse. This is determined by the modified adjusted gross income (MAGI) on the couple’s joint tax return.
Note that eligibility rules apply for opening a Spousal IRA. First, the two individuals must be legally married in order to open a Spousal IRA. Second, the accounts cannot be jointly held, and each account must be in the name of the account owner to qualify. Third, the couple must file a joint tax return.

Choosing the Right Spousal IRA Account

Once eligibility is determined, non-working spouses can choose to open either a Traditional IRA or a Roth IRA. Spousal versions of the Traditional and Roth IRAs are held to the same contribution and distribution requirements. For example, contributions to a Traditional IRA are tax-deferred and cannot be made after the owner has reached age 70 ½. Traditional IRAs have required minimum distributions after the age of 70 ½. Alternatively, taxes are paid on Roth IRA contributions upfront, and savings grow tax-free. Contributions can be made at any age but the accountholder must meet income eligibility requirements, and there are no required minimum distributions.

Distributions from the Traditional IRA can be taken at any time, and they are subject to relevant income taxes in the year the withdrawal is taken. Distributions taken before the age of 59 ½ may be subject to a 10% tax penalty. Roth IRAs have a separate set of distribution requirements. Withdrawals after the age of 59 ½ are tax-free, as long as the account has been open for five years. Withdrawals before the age of 59 ½ may be subject to income taxes on earnings and a 10% tax penalty. In both cases, there are a number of exceptions that may permit early withdrawals without a tax penalty.

Understanding Tax Benefits of Spousal IRAs

Any tax benefits that apply to Traditional and Roth IRA contributions apply to Spousal IRAs as well. For example, when neither spouse participates in an employer-sponsored plan, the full amount of contributions to both Traditional IRA accounts may be tax-deductible. In addition, low and moderate- income families may qualify for the Retirement Savings Contributions Credit (Saver’s Credit), which is designed to make saving for retirement more attractive.

Any financial institution that offers retirement savings products can open a Spousal IRA, which makes it easy to get started with retirement savings. Protecting a non-working spouse by building retirement savings is an important part of your overall wealth management plan.


Nothing in this article should be construed as tax advice, a solicitation or offer, or recommendation, to buy or sell any security. This article is not intended as investment advice, and Wealthfront does not represent in any manner that the circumstances described herein will result in any particular outcome. Financial advisory services are only provided to investors who become Wealthfront clients.

This article is not intended as tax advice, and Wealthfront does not represent in any manner that the outcomes described herein will result in any particular tax consequence. Prospective investors should confer with their personal tax advisors regarding the tax consequences based on their particular circumstances. Wealthfront assumes no responsibility for the tax consequences to any investor of any transaction. Investors and their personal tax advisors are responsible for how the transactions in an account are reported to the IRS or any other taxing authority.