What Is a Spousal IRA and How Does It Work?

A spousal Individual Retirement Arrangement (IRA) is a retirement savings tool for married couples. It is not a distinct type of IRA but a provision allowing a spouse with taxable compensation to make contributions for their partner who has little or no income. This mechanism enables families to continue saving for retirement for both partners, even if one spouse is a homemaker or is out of the workforce. The purpose is to ensure that a non-working or low-earning spouse is not disadvantaged in their ability to accumulate retirement funds.

Eligibility and Contribution Rules

To qualify for a spousal IRA, a couple must satisfy two primary conditions. The first is that the couple must file their federal income taxes with a “married filing jointly” status. The second is that the spouse who earns income must have enough taxable compensation to cover the total contributions made to both their own IRA and the spousal IRA.

The annual contribution limits for a spousal IRA are the same as for a standard IRA. For 2025, an individual can contribute up to $7,000, with an additional $1,000 catch-up contribution for individuals age 50 and over. These limits apply to each spouse individually, meaning a qualifying couple under age 50 could contribute a total of $14,000 across two separate IRAs.

This total amount can be divided between the two accounts as the couple sees fit, as long as no single account receives more than the annual maximum. For instance, they could contribute $7,000 to one IRA and $7,000 to the other, or split it $4,000 and $7,000. The funds for the spousal IRA can be placed into either a Traditional IRA or a Roth IRA.

Tax Implications of Contributions

The tax treatment of contributions to a spousal IRA depends on whether it is a Traditional or a Roth IRA. For a Traditional spousal IRA, the ability to deduct the contribution on a joint tax return is determined by the couple’s Modified Adjusted Gross Income (MAGI) and whether the working spouse is covered by a retirement plan at their job. If the working spouse is not covered by a workplace plan, the full contribution to the spousal IRA is deductible regardless of income.

If the working spouse is covered by a retirement plan, the deductibility for the spousal IRA contribution is subject to MAGI phase-out ranges. For 2025, if the couple’s MAGI is $236,000 or less, the contribution is fully deductible. The deduction is gradually phased out for income between $236,000 and $246,000, and no deduction is allowed if the couple’s MAGI is $246,000 or more.

In contrast, contributions made to a Roth spousal IRA are never tax-deductible. The benefit of a Roth IRA comes from tax-free qualified withdrawals in retirement. Eligibility to contribute to a Roth IRA is also subject to MAGI limits. For 2025, a married couple filing jointly can make a full contribution if their MAGI is less than $236,000, with the ability to contribute phased out for MAGI between $236,000 and $246,000.

Establishing and Funding the Account

Setting up a spousal IRA involves opening a standard IRA for the non-earning spouse at a financial institution like a bank, brokerage firm, or mutual fund company. The account is opened under the name and Social Security number of the spouse who will own the account. A spousal IRA is an individual account, not a joint one, and is owned entirely by the non-earning or low-earning spouse.

Once the account is open, the working spouse can fund it through an electronic funds transfer or by check. The deadline for making contributions for a specific tax year is the federal tax filing deadline, which is typically April 15 of the following year.

Account Ownership and Withdrawals

The funds contributed to a spousal IRA are the exclusive property of the spouse in whose name the account is held. The account owner has full control over investment decisions and is the only person who can authorize withdrawals or name beneficiaries. Withdrawal rules for a spousal IRA are identical to those for any other IRA.

Distributions of earnings are subject to income tax and a 10% early withdrawal penalty if taken before the account owner reaches age 59½, unless an exception applies. For Traditional spousal IRAs, the owner must begin taking Required Minimum Distributions (RMDs) after reaching age 73. Roth IRAs do not have RMD requirements for the original owner.

In the event of a divorce, the spousal IRA is considered a marital asset and is subject to division as determined by the divorce decree or settlement agreement. Upon the death of the account owner, the assets in the spousal IRA pass directly to the designated beneficiaries, bypassing the probate process.