What Is a Spousal IRA and How Does It Work?

A spousal Individual Retirement Account, or IRA, is a retirement savings vehicle that enables a working individual to make contributions on behalf of their spouse who has minimal or no income. This is a method of funding a standard Traditional or Roth IRA, not a special type of account. It allows households to maximize their retirement savings even if one partner is not in the workforce. The account is owned individually by the spouse receiving the funds, giving them sole control over investment decisions and beneficiary designations.

Spousal IRA Eligibility Requirements

To utilize a spousal IRA, a couple must meet specific criteria set by the Internal Revenue Service (IRS). The couple must be legally married and file a joint federal income tax return for the year the contribution is made.

The contributing spouse must have taxable compensation, such as wages or self-employment income, that is at least equal to the total amount contributed to both their own IRA and the spousal IRA. Income from investments, pensions, or Social Security benefits does not qualify as compensation for this purpose.

Finally, the spouse for whom the contribution is made must have little to no earned income for the tax year. The spousal IRA is specifically designed to provide a retirement savings opportunity for partners who are out of the workforce.

Contribution Rules and Limits

The amount that can be contributed to a spousal IRA is governed by the annual IRA contribution limits. For 2025, the maximum contribution is $7,000, a limit that is subject to periodic adjustments for inflation.

An additional catch-up contribution is available for individuals age 50 and older. This provision allows an extra $1,000 to be contributed annually, bringing the total potential contribution for an eligible spouse to $8,000 for 2025.

The deadline for making contributions for a specific tax year is the federal income tax filing deadline, which is usually April 15th of the following year. This deadline does not include any filing extensions.

Choosing Between a Traditional and Roth Spousal IRA

When establishing a spousal IRA, a choice must be made between a Traditional and a Roth IRA. Contributions to a Traditional Spousal IRA may be tax-deductible, which can lower the couple’s current taxable income. The investments within the account grow on a tax-deferred basis, and distributions in retirement are taxed as ordinary income.

A Roth Spousal IRA operates differently. Contributions are made with after-tax dollars, so there is no upfront tax deduction. The advantage is that investments grow completely tax-free, and qualified withdrawals made in retirement are also tax-free. This can be beneficial if a couple anticipates being in a higher tax bracket during their retirement years.

The ability to deduct contributions to a Traditional IRA can be limited if the contributing spouse is covered by a retirement plan at work. Likewise, the ability to contribute directly to a Roth IRA is limited by income. For married couples filing jointly in 2025, these benefits are phased out as their Modified Adjusted Gross Income (MAGI) increases between $236,000 and $246,000. If neither spouse is covered by a workplace retirement plan, Traditional IRA contributions are generally fully deductible regardless of income.

How to Set Up a Spousal IRA

The first step in establishing a spousal IRA is to select a financial institution, such as a brokerage firm, bank, or mutual fund company. You will need to provide personal information for the spouse who will own the account, including their full name, address, date of birth, and Social Security number.

During the application process, you must designate the account as either a Traditional or Roth IRA. The account must be opened in the name and under the Social Security number of the non-working or low-income spouse. Once the account is open, the contributing spouse can make a deposit up to the annual limit, and the funds can be invested.