Can You Have a Joint IRA? Alternatives for Spouses

An Individual Retirement Arrangement (IRA) is a personal savings account offering tax advantages for retirement. While many financial accounts allow for joint ownership, IRAs are specifically designed for individuals and cannot be jointly owned by spouses or any other parties. This individual nature simplifies tax reporting and compliance for both the account holder and the Internal Revenue Service.

The Individual Nature of IRAs

Each IRA is uniquely tied to a single Social Security number. This direct link ensures that all contributions, deductions, and distributions are attributed to one specific individual for tax purposes.

This individual ownership rule applies uniformly across all types of IRAs, including Traditional IRAs, Roth IRAs, Simplified Employee Pension (SEP) IRAs, and Savings Incentive Match Plan for Employees (SIMPLE) IRAs. The Internal Revenue Service (IRS) mandates this individual account structure, which means each person must open and maintain their own IRA if they wish to save for retirement using these accounts.

Spousal IRAs

While joint IRAs are not permitted, a concept known as a “Spousal IRA” allows married couples to contribute to retirement savings for a spouse who has little or no earned income. A Spousal IRA is not a joint account; rather, it is an individual IRA owned by the non-earning or lower-earning spouse. The working spouse contributes to this account on behalf of their non-working or lower-earning partner.

To establish a Spousal IRA, the couple must be legally married and file their taxes jointly. The working spouse must have sufficient earned income to cover both their own IRA contributions and the contributions made to their spouse’s IRA. For instance, if one spouse earns enough income, they can contribute up to the annual IRA limit for themselves and an equal amount for their non-working spouse’s IRA, effectively doubling their combined IRA savings. This contribution for the non-working spouse follows the same annual contribution limits as any other IRA, including catch-up contributions for those aged 50 or older.

Beneficiary Designations and Inherited IRAs

Spouses can provide for each other’s financial security in retirement through proper beneficiary designations on their individual IRA accounts. Naming a spouse as the primary beneficiary ensures that upon the account holder’s death, the surviving spouse has various options for managing the inherited funds. This arrangement can offer continuity of tax-advantaged growth and income.

A surviving spouse inheriting an IRA typically has the most flexibility compared to other beneficiaries. They can choose to roll over the inherited IRA assets into their own existing IRA, treating the funds as their own for future contributions and distributions.

Alternatively, a surviving spouse can elect to treat the inherited IRA as their own, delaying required minimum distributions (RMDs) until they reach their own RMD age, generally age 73, rather than adhering to the deceased spouse’s RMD schedule. Another option is to maintain the account as an inherited IRA, deferring distributions until the deceased spouse would have reached age 73.

Non-spouse beneficiaries are generally subject to a 10-year distribution rule under the SECURE Act, meaning the inherited IRA must be fully distributed within 10 years of the original owner’s death.