How a nonworking spouse can save for retirement with an IRA


Couple sharing a light momentFor people in the workforce, saving for retirement in the employer’s retirement plan is often a simple decision. Having your contributions deducted directly from your paycheck is so convenient that you may not even miss the money that you are setting aside for your future. But what about someone who does not work outside the home: Should they save for their retirement? If so, how can they go about it?

How does the IRA spousal provision work?

One retirement savings opportunity for the nonworking spouse is found in the Internal Revenue Code. The rule provides that if you are not working and married to someone who is, you can contribute to an Individual Retirement Account (IRA) the same as if you were working. Some people call this a Spousal IRA, although it’s technically just an IRA.

IRA advantages and contribution limits

A key advantage to saving for retirement in an IRA is that you may be able to reduce your taxable income by the amount of your contributions. In addition, any gains on your investment dollars are not taxed until you pull money out in retirement. An IRA allows people saving for retirement to put away 100% of their earned income, up to $5,500 for the 2015 tax year. Law currently allows individuals age 50 and older to make a catch-up contribution of up to an additional $1,000 yearly, for a total of $6,500. The provision referenced above extends these contribution limits to nonworking spouses, too.

Spousal contribution example

Jane (55) works fulltime and is married to Jack.
Jack (58) was laid off and does not expect to have any earned income this year.

If Jane and Jack file their tax returns as a married couple, Jack is eligible to contribute to his own IRA based on Jane’s earned income as shown in the table at right.

  Earned Income IRA Contribution
Spousal contribution example
Jane $ 75,000 $ 6,500
Jack $ 0 $ 6,500
Combined $ 75,000 $ 13,000

Just because you may not have earned income does not mean you cannot save money for retirement on a tax-advantaged basis, especially if you have a spouse who is employed. You can contribute up to $5,500 per year ($6,500 for those over 50) to an IRA as long as your spouse earns enough income.


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