The Rules for a Spouse on a Roth IRA Contribution
- Spousal IRAs let non-earning spouses put aside tax-sheltered savings.A moment to savour! image by Shirley Hirst from Fotolia.com
Spouses who take time off of work do not have to stop saving for retirement. Usually, the income that people contribute to an individual retirement account (IRA) must be earned through wages, salary or commissions. But the Internal Revenue Service (IRS) has special rules for spouses who earn little or no money that allow the wage earner in the family to make IRA contributions for the spouse if they file their taxes jointly. - Spousal Roth IRA contribution limits have matched ordinary IRA contribution limits since 1996. In 2010, the contribution limit for those 49 and younger is $5,000. The year they turn 50, investors can begin contributing up to $6,000. Therefore, couples who each make a maximum Roth IRA contribution can contribute a total of $10,000 if both are under 50; $11,000 if one spouse is under 50; and $12,000 if both are 50 or older.
- As of 2010, people who are married and file jointly can both make a maximum Roth IRA contribution if they have a combined income of up to $167,000. Spouses who who file separately can make only up to $10,000. The IRS rule is designed to prevent people from filing separately to skirt Roth IRA income limits.
- Spouses do not need income of their own to save, but a couple's combined earned income must be at least that of their total IRA contributions. For instance, if Laura earns $7,000 in 2010 and Adam earns nothing, as a couple they cannot contribute more than $7,000 to their IRA accounts.
- Though married couples often plan their retirement futures together, an IRA requires a single owner. The accounts must stay separate in order to qualify for tax benefits. Spouses can, however, make one another the beneficiaries of their IRAs. In this case, a surviving spouse would be able to treat the inherited IRA as her own.
