A Spousal IRA is a type of retirement account that is available to someone that is married to a working spouse, but does not work themselves. This type of account is just as important as a regular IRA account due to the fact that it offers tax deferrals.
Those that don’t work do not have the same retirement options available, such as an employer sponsored 401k. The Spousal IRA can bridge this gap.
Spousal IRA Rules
- The Spouse with the IRA account must not have any earned income and the working spouse must earn enough to cover that contribution.
- The contribution limits of a spousal retirement plan in 2010 are $5,000 annually if you are under the age of 50; those over 50 years old can contribute up to $6,000 a year.
- When money is put into a Spousal IRA account, that money will belong to the spouse that is not working, even if the working spouse is the one that made the contribution.
There are no other retirement planning programs available to non working spouses that allow tax deferred contributions, which makes it a valuable aspect of retirement when only one spouse works. Another source of income for a non-working spouse is Social Security; though they will have no benefits themselves, they can collect a percentage of their spouse’s Social Security benefits after they reach the age of retirement.
We at the Mendel Law Firm can help you uncover your options and choose the strategy that is best for you.