If you are married, and your spouse is a homemaker, you might think only you can make contributions toward retirement via eligible retirement accounts and plans.

But that isn’t the case! A spousal IRA can allow both partners to save toward their retirement years on a single income.

What is a Spousal IRA?

“Spousal IRA” is a descriptive term, not a true separate type of IRA.

A spousal IRA is an individual retirement account (it can be either a traditional or a Roth IRA), owned by the non-working spouse in whose name it is opened, even as the working spouse makes the contributions.

To open and contribute to a spousal IRA, the couple must file their taxes jointly, and the working spouse must earn at least as much as s/he contributed to both their own and their spouse’s IRA each year.

Contributions made by the working spouse are subject to the rules governing traditional or Roth IRA contributions, as applicable.

These include:

For Traditional IRAs

In brief:

• A traditional IRA is funded via pre-tax dollars, and its investments grow with taxes on both contributions and growth deferred until the account owner makes withdrawals.
• Subject to certain income limits, and whether the account owner (or spouse) is covered by an employer-sponsored retirement plan, contributions to an IRA may be tax deductible in whole or in part.
• Withdrawals, whether via required minimum distributions (RMDs), rollover to another retirement account, or other form of withdrawal, can be made at any time – but if funds are withdrawn prior to the account owner’s reaching age 59½ , they are subject not only to income tax, but also a penalty equal to 10% of the amount withdrawn. There are some specific circumstances and purposes which may eliminate the imposition of the 10% penalty.
• Contributions to a spousal IRA can be made if there is sufficient income from employment, up until RMDs must be taken – the deadline is April 1 of the year following that in which the account owner turns 73 (if you did not reach age 72 before December 31, 2022).

For Roth IRAs

Roth IRAs are different from traditional IRAs:

• A Roth IRA is funded with post-tax dollars, rather than pre-tax.
• Once assets have been held in a Roth IRA for 5 years, the full amount contributed to the account can be withdrawn at any time by the account owner and are not subject to income tax, since tax was paid on the contributions.
• Once the account owner reaches age 59½, investment earnings held in the Roth IRA can be withdrawn tax- and penalty-free, providing the assets have been held at least 5 years.
• Withdrawals made before the Roth account has been held for 5 years or the owner is under 59½ years old may be subject to both income tax and a 10% penalty.
• Roth IRAs are not subject to RMDs – no withdrawals of any kind are required, and a Roth account can be passed along to a beneficiary intact, no matter the age of the account owner at death.
• For 2025, to be eligible to open a Roth IRA, a married joint-filer must have no more than $245,999 in modified adjusted gross income (MAGI), though for contribution of the full amount of the 2025 limit (which is set annually by the IRS), no more than $236,000 can be earned. This threshold is also set by the IRS, usually during the quarter prior to the start of the year for which it will be applicable.

Should You Open a Spousal IRA for Your Homemaker Spouse?

A spousal IRA can be a great way to save extra money toward retirement:

• By having IRAs for both spouses, you can contribute the maximum allowable amount to both accounts – twice the retirement savings! If the working spouse has an employer-sponsored retirement plan, that’s an additional avenue for savings, not an “instead of.”
• For 2025, the limit for contributions to a traditional or Roth IRA is $7,000, with an additional $1,000 “catch-up” contribution allowed by those over age 50.

If it fits with your family’s current situation, your income, goals, and inclinations, a spousal IRA might be the right move, to protect and enhance your retirement, to protect your spouse’s future – but we urge you to consult with your virtual CFO (if you don’t have one for your business, Rigby Financial Group can help you determine whether that, too, would be a good move!) or other trusted financial advisor. S/he can help you navigate the waters of retirement planning, in light of your own unique family, life, and goals.

Because one size never fits all – and at RFG, we are never looking to offer cookie-cutter solutions – every service we offer is tailored to the individual client’s needs and desires.

So, come to us for bespoke tailoring – of your financial, tax, retirement, and estate plans, of ensuring your company’s financial well-being into the future, of helping you navigate through the complex issues and details arising from the sale or purchase of a business.

If you are wondering whether an IRA for your homemaker-spouse is a good idea for your family, consult RFG. We have the expertise and experience to give you the facts – and counsel – so you can come to a decision you have confidence in.

Please click here to email us directly – let us know how we can help – that‘s what we are dedicated to and passionate about.

Until next time –

Peace,

Eric