Does your spouse stay home to raise the kids or manage the household? Did they take a career break for school, or do they work part-time with a low income? If so, you’re likely facing one of the most common retirement planning anxieties I saw in my 30-year career:
How does the non-working or lower-earning spouse save for their own future?
Many couples believe that if you don’t earn an income, you can’t contribute to an IRA. For years, this was true, creating a massive retirement savings gap, especially for women. But that changed, and the solution is the Spousal IRA. What I call the ultimate Financial Equalizer for married couples.
This is not a special type of account. It’s a set of IRS rules that allows a working spouse to fund an IRA for their partner. This guide is the playbook I’ve used with hundreds of clients. We’ll dismantle the confusion and give you a clear, actionable plan as part of your overall retirement planning.
📌 Key Takeaways on Spousal IRAs
- It’s a Rule, Not an Account: A Spousal IRA isn’t a special account type. It’s an IRS rule that lets a working spouse fund a standard Traditional or Roth IRA for a non-working or low-earning spouse.
- Joint Filing is a Must: To be eligible, you must be legally married and file a joint tax return. Your combined household earned income must be greater than your total contributions.
- It’s a Financial Equalizer: A Spousal IRA ensures a career break for caregiving doesn’t become a permanent retirement penalty, allowing both partners to build wealth.
Key Takeaways Ahead
What a Spousal IRA Is (and What It Isn’t)
Let’s clear this up immediately: you cannot open a “joint IRA.” A Spousal IRA isn’t a new type of account you select from a dropdown menu. It is a standard Traditional IRA or Roth IRA that belongs only to the non-working or lower-earning spouse.
The “Spousal” part simply refers to the IRS rule that allows the higher-earning spouse’s income to be used to fund the other spouse’s account. This concept was championed by former Senator Kay Bailey Hutchison to promote financial equality in retirement, as noted in congressional records.
⚠️ Myth Busted: “It’s a Joint Account”
A common and dangerous misconception is that a Spousal IRA is a joint retirement account. This is false. All IRAs are, by law, individual accounts. The Spousal IRA is owned 100% by the receiving spouse, giving them full control and legal ownership, which is a critical distinction for asset protection, especially in cases of divorce
The 5-Step Checklist to Qualify for a Spousal IRA
During my years as a financial planner, I saw countless couples miss out because they assumed they didn’t qualify. Don’t make that mistake. The rules are like a combination lock. All tumblers need to align, but it’s simpler than you think.
Here is the definitive checklist based on the rules outlined in IRS Publication 590-A. In my practice, I’ve seen more couples mistakenly disqualify themselves over rule #3 (Earned Income) and #4 (Contribution Limits) than any other.
Pay close attention to these because you must be able to say “yes” to all five.
- You are legally married.
The rules are based on marital status at the end of the tax year (December 31st). - You file a joint federal income tax return.
Filing as “Married Filing Separately” disqualifies you. - The contributing spouse has earned income.
This includes wages, salaries, commissions, and self-employment income. Passive income like rent or investments doesn’t count. - Your combined earned income is greater than the total IRA contributions.
For 2025, if you both want to contribute the maximum of $7,000, your household earned income must be at least $14,000. - The receiving spouse is under age 73 for a Traditional IRA.
There are no age limits for contributing to a Roth IRA.
Traditional vs. Roth Spousal IRA: A Planner’s Guide to Choosing
Once you’ve confirmed you’re eligible (IRS Eligibility Rules for IRA), you face the most important strategic decision: Traditional or Roth? The right choice could mean a difference of tens of thousands of dollars in taxes over the course of your retirement.
| Factor | Traditional Spousal IRA | Roth Spousal IRA |
|---|---|---|
| Tax Treatment | Contributions may be tax-deductible now. Withdrawals are taxed as ordinary income in retirement. | Contributions are made with after-tax dollars. Qualified withdrawals in retirement are 100% tax-free. |
| Best For… | Couples in a high tax bracket now who expect to be in a lower tax bracket in retirement. | Couples in a lower tax bracket now who expect to be in a higher tax bracket in retirement. |
| RMDs | Yes, Required Minimum Distributions (RMDs) must begin at age 73. | No RMDs for the original account owner, making it a great estate planning tool. |
The decision boils down to one simple question I’d ask every client:
When do you want to pay your taxes?
Pay them now with a Roth IRA and withdraw tax-free later or get a tax break now with a Traditional IRA and pay taxes on withdrawals later.
For a full breakdown of the differences, see our detailed guide on the Roth vs. Traditional IRA.
If you want to run the numbers for your own situation, this tool can help you compare the long-term outcomes.
Roth Decision Calculator
Roth Conversion Summary
| Scenario | Est. After-Tax Value at Retirement |
|---|---|
| Convert to Roth | |
| Keep Traditional | |
| Difference |
Comparison chart appears here
Roth vs. Traditional Contribution Summary
| Account Type | Est. After-Tax Value at Retirement |
|---|---|
| Roth Contribution | |
| Traditional Contribution | |
| Difference |
(Assumes tax savings from Traditional are invested)
Comparison chart appears here
Disclaimer: Calculations are estimates based on inputs and simplified tax assumptions. They do not account for state taxes beyond the rate entered, phase-outs, alternative minimum tax, potential tax law changes, or specific investment performance. This is not tax or investment advice. Consult qualified professionals.
💡 Michael’s Tip: The Power of Tax Diversification
The smartest couples don’t always choose one or the other; they use both. By having a mix of pre-tax (Traditional) and tax-free (Roth) money in retirement, you gain tremendous flexibility to manage your tax bracket year by year. This is a key strategy I used with my high-net-worth clients.
Real-World Scenarios: How My Clients Won with Spousal IRAs
Theory is one thing; results are another. Here is how these strategies played out for real people I worked with.
The Situation: “The Millers” – A single-income family.
The husband was a high-earning executive, and the wife was a stay-at-home parent. They were in a high tax bracket.
The Strategy:
For 20 years, they maxed out a Traditional Spousal IRA for the wife. This gave them a significant tax deduction each year during their peak earning years, which they used to fund a taxable brokerage account.
The Result:
The immediate tax savings compounded over two decades, adding an extra six figures to their overall net worth. Which they then used to fully fund a 529 plan for their two children.
The Situation: “The Jacksons” – A young couple.
The wife was a teacher, and the husband was a freelance graphic designer with a fluctuating, lower income. They were in a low tax bracket.
The Strategy:
They knew their income would grow. They maxed out a Roth Spousal IRA for the husband, paying the taxes now while their rates were low.
The Result:
They built a completely tax-free bucket of money that will be invaluable in retirement, protecting them from future tax rate increases and the impact of future Required Minimum Distributions.
Advanced Strategies for High Earners
For my clients who were high earners (“Maximizer Marks”), the standard rules were just the beginning.
The Backdoor Roth IRA for a Non-Working Spouse
If your household income is too high to contribute to a Roth IRA directly (the MAGI phase-out for 2025 starts at $230,000 for joint filers, according to the latest IRS announcements), you can use the Backdoor Roth IRA strategy for the non-working spouse.
For my high-earning clients whose income exceeded the MAGI phase-out, the front door to a Roth IRA was closed. So, we used the back door.
The Process:
- Contribute the maximum amount to a new, empty Traditional Spousal IRA. Do not take a tax deduction for this contribution.
- Wait a few days for the funds to settle.
- Convert the full balance of the Traditional IRA to a Roth IRA.
Because you didn’t take a deduction, the conversion is a non-taxable event. This legally bypasses the income limits.
Warning:
This strategy can create a major tax headache if the receiving spouse has any other pre-tax IRA assets. This is known as the pro-rata rule (critical component of the Roth conversion rules). And it’s a trap I’ve helped many clients navigate. Do not attempt this without consulting a professional.
How to Open a Spousal IRA in 15 Minutes
Ready to take action? Here are the simple, concrete steps.
- Choose a Brokerage.
Go with a low-cost, reputable firm like Vanguard, Fidelity, or Charles Schwab. - Select “Open a New IRA.”
Remember, you are opening a standard Traditional or Roth IRA. There is no special “Spousal IRA” button. - Enter the Receiving Spouse’s Information.
The account must be in the name and Social Security number of the non-working or lower-earning spouse. They are the owner. - Fund the Account.
Link the joint bank account and transfer the contribution. The money can come from a joint account or from the working spouse’s individual account. - Designate the Tax Year.
When you contribute between January 1st and the tax filing deadline (usually April 15th), you can choose to apply it to the previous year or the current year. Our guide to the IRA contribution deadline explains this in detail. - Invest the Funds.
The money is in the account, but it’s not invested yet! Choose a simple, low-cost investment like a Target-Date Index Fund or a broad-market ETF.
💡 Michael’s Final Tip: Don’t Forget Step #6!
The most common mistake I see is a client successfully funding the IRA but forgetting to actually invest the money. The cash just sits there, earning nothing. Once the contribution is made, immediately choose your investment—even a simple Target-Date Fund is a perfect start—and put your money to work.
Now, try searching for: IRA contribution limits, Roth conversion rules, or retirement planning guide.
📚 Deepen Your Retirement Strategy
- Learn how to start a Roth IRA today
A step-by-step guide to opening your first tax-free retirement account in minutes. - Check the latest Roth IRA income limits
Understand the income phase-out rules that affect your ability to contribute directly. - Find out how many IRAs you can have
Learn the rules for owning and contributing to multiple retirement accounts at the same time.
Conclusion: The Ultimate Financial Equalizer for Your Family
In my three decades of planning, I’ve seen that the Spousal IRA is often the unsung hero of a successful retirement plan. It’s more than just a savings vehicle; it’s a tool of financial equality. It ensures that both partners in a marriage have the dignity and security of their own retirement nest egg, regardless of who earns the primary paycheck.
It transforms a potential retirement gap into a powerful, shared opportunity. By understanding the rules and using the strategies in this guide, you can turn your family’s teamwork into a legacy of financial strength as you work to get your personal finances in order.
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Note: The content provided in this article is for informational purposes only and should not be considered as financial or legal advice. Consult with a professional advisor or accountant for personalized guidance.
