How to Open a Spousal IRA: Rules and Requirements

A Spousal IRA offers a valuable option for couples where one spouse earns significantly less or has no earned income. This Individual Retirement Arrangement allows a working spouse to contribute to an IRA on behalf of their non-working or low-earning spouse. It helps ensure both partners can build their own retirement savings, providing financial security for the future. Understanding the specific rules and requirements is important for maximizing its benefits.

Eligibility for a Spousal IRA

Establishing a Spousal IRA requires meeting specific criteria for both partners. The couple must be legally married and file their taxes jointly. The working spouse must have sufficient taxable compensation to cover contributions made to both their own IRA and their spouse’s IRA. The combined contributions cannot exceed the earned income reported on their joint tax return.

The Spousal IRA is always established and owned in the name of the non-working or low-earning spouse. This individual must not have earned income, or their earned income must be less than the amount contributed to their IRA for the year. Traditional IRA contributions generally cannot be made once the account owner reaches age 73, when required minimum distributions (RMDs) begin.

Contribution Limits and Rules

Spousal IRA contributions align with general IRA contribution limits. For 2025, the annual contribution limit for an IRA is $7,000. Individuals aged 50 and older can make an additional “catch-up” contribution of $1,000, bringing their total annual limit to $8,000. These limits apply per person, meaning each spouse can contribute up to this maximum amount.

The total contributions made to both spouses’ IRAs in a given tax year cannot exceed the working spouse’s taxable compensation. For example, if both spouses are under 50, the couple can collectively contribute up to $14,000, assuming the working spouse has at least that much earned income.

Traditional Versus Roth Spousal IRAs

When setting up a Spousal IRA, individuals can choose between a Traditional Spousal IRA or a Roth Spousal IRA, each offering distinct tax advantages. Contributions to a Traditional Spousal IRA may be tax-deductible in the year they are made, potentially lowering the couple’s current taxable income. However, the deductibility depends on the couple’s modified adjusted gross income (MAGI) and whether either spouse is covered by a retirement plan at work. Funds in a Traditional IRA grow tax-deferred, meaning taxes are paid only upon withdrawal in retirement.

In contrast, contributions to a Roth Spousal IRA are not tax-deductible, as they are made with after-tax dollars. The primary advantage of a Roth IRA is that qualified withdrawals in retirement, including both contributions and earnings, are entirely tax-free. To contribute to a Roth Spousal IRA, the couple’s MAGI must fall within specific income limits. For 2025, married couples filing jointly can make a full Roth IRA contribution if their MAGI is less than $236,000, with partial contributions allowed for incomes between $236,000 and $246,000. Roth IRAs do not have required minimum distributions (RMDs) during the original owner’s lifetime.

Opening and Funding Your Spousal IRA Account

Opening and funding a Spousal IRA involves several steps. Begin by selecting a financial institution, such as a brokerage firm or a mutual fund company, that offers IRA accounts. Consider fees, investment options, and customer service. Some providers may have minimum initial deposit requirements, though many online brokers offer accounts with no minimum to open.

Once a provider is chosen, complete an application online or through paper forms. You will provide personal information for both spouses, including names, addresses, Social Security numbers, and dates of birth. Bank account details are necessary for funding. The account will be opened in the name of the non-working or low-earning spouse.

After establishment, fund your Spousal IRA through methods like electronic transfers, mailing a check, or rolling over funds. Designate beneficiaries for the IRA, which determines who inherits the assets upon the owner’s death. The financial institution will provide confirmation of the account opening and access to online portals.