Why You Should Open a Spousal Roth IRA
A Perfect Account for Married Couples
A spousal Roth IRA is a good retirement account to open if one of the spouses doesn’t receive wages or doesn’t earn a significant amount with respect to contributing to the household income. For most middle income wage earners, the Roth IRA offers a viable means to save for retirement. Therefore, adding a spousal account is helpful to any couple who files jointly and the major portion of the income is earned by one of the partners.
The Benefits of a Roth Spousal Account
By choosing a spousal Roth IRA, you have all the advantages of a Roth account with the added provision that the qualifying amount of the money is not contingent on each spouse earning an income. This type of IRA makes it possible for the spouse who doesn’t earn an income or doesn’t earn a significant amount to enjoy the same benefits as their wage-earning spouse enjoys by investing in the Roth individual retirement account. Therefore, as long as you and your spouse qualify with respect to the individual income requirements, you are eligible to invest in this type of account.
Spousal Roth IRA Income Limits
With a spousal Roth account then the working spouse can make a spousal contribution for the spouse who doesn’t earn enough income, if any, to qualify individually. To be eligible then to make such a contribution, you must be married and file your taxes jointly. In addition, you must have earned income in an amount that is above the required contribution amount. However, there is a limit as to how much you can earn when investing in this type of individual retirement account. You can’t contribute to a spousal Roth IRA if you make more than $160,000 per year.
Establish a Spousal Roth Account Whenever you Want
However, you’re not limited as to when you establish your account. Nevertheless, your contributions must be earned income. Therefore, with respect to income the wage-earning spouse can contribute any income such as salaries, bonuses, tips, wages, commissions, fees, alimony or self-employment income.
Maintain a Spousal Account Indefinitely
You can maintain a Roth account for your spouse as long as you like. Spousal contributions must be made by April 15 to be included for the tax year.
Contributions to Your Spousal Account
For a spousal Roth account and individual Roth account you can contribute up to $10,000 to your Roth account and your spouse’s account. If you’re both over 50, you can contribute up to $10,000 for both IRA accounts as well as $2,000 in “catch-up” amounts for both accounts.
Individually Funded
Your Roth account for your spouse and your individual retirement account can’t be held jointly. They are both “individual” accounts so you’re unable to do this. A spousal Roth individual retirement account merely provides you and your spouse the latitude to provide contributions individually for retirement regardless of which spouse earns the lion’s share of the income.
Added Security for Retirement
As you can see, you and your spouse can both enjoy the benefits of a Roth account above and even beyond the 401K you may have at work. With a spousal Roth account, you both can be assured that you can enjoy a comfortable retirement.
A Case in Point
Therefore, if you file your joint return for $80,000 and only one of you work, then a contribution of up to $5,000 per year can be made in each Roth retirement account if both of you are under 50 and up to $6,000 annually if you’re both over 50.
Set up a Spousal Roth Account and Retire in Comfort
Most people will spend a good amount of time retired; therefore, in addition to a 401K or pension, it’s a good idea to invest in a Roth account as well as establish a spousal Roth IRA for your husband or wife if you both want to retire and live comfortably.