Just because you don\u2019t have a job doesn\u2019t mean you can\u2019t save for retirement. As long as your spouse earns taxable income, they can open a tax-advantaged retirement account in your name. This compensation can include a salary, wages, commissions, or self-employment net income. This type of account is known as a \u201cspousal IRA,\u201d It works in the same way as traditional and Spousal Roth individual retirement accounts (IRA). In this post, we will look at the Spousal Roth IRA income contribution limits 2022 rules and how to open a Spousal IRA.<\/p>\n
If you file taxes jointly and at least one of you earns enough money to meet the funding requirements for two IRAs, you can both contribute to your own separate Spousal Roth IRA. However, the combined IRA contributions for both cannot exceed the lesser of the taxable compensation reported on your joint tax return or the annual contribution limits on Spousal Roth IRA multiplied by two.<\/p>\n
As of December 2021, there is no age limit for contributing to a traditional IRA. Similarly, there is no age limit for contributing to a Roth IRA.<\/p>\n
A spousal Roth IRA is an individual retirement account to which a working spouse contributes on behalf of a spouse who earns little or no income. This is an exception to the general rule that one must have made income to contribute to an IRA.<\/p>\n
This means nonworking spouses can contribute to a spousal IRA if they file taxes jointly with a working spouse. If each spouse has a Spousal Roth IRA, they can contribute the maximum annual income contribution limits of up to $6,000 in 2022 ($7,000 if age 50 or older).<\/p>\n
A spousal Roth IRA is a common name for the IRS rules that allow a spouse who does not work or earn income to fund an individual retirement account. There is no unique IRA for spouses; instead, the rule enables non-working spouses to contribute to a traditional IRA or a Roth IRA as long as they file a joint tax return with their working spouse.<\/p>\n
Individual retirement accounts established under the rules of the spousal Roth IRA are not co-owned. Both the working and non-working spouses have IRAs in their names. They can be accounts opened for each spouse before they married, funds opened while they were married and both working, or accounts opened by the non-working spouse when they were not working.<\/p>\n
The annual contribution limits for spousal Roth IRAs are the same as for other IRAs: $6,000 per individual in 2021 and 2022, or $7,000 for people over 50. A couple with only one working spouse can contribute up to $12,000 per year under the spousal IRA rules, $13,000 if one spouse is 50 or older, or $14,000 if both are 50 or older. Individual annual IRA contribution limits apply to each account.<\/p>\n
Contributing to a spousal individual retirement account (IRA) allows married couples to save for retirement even if only one spouse is employed. Individuals who do not have job income cannot generally contribute to tax-advantaged retirement accounts such as IRAs because they do not have \u201celigible\u201d compensation. There is an exception for married, non-working individuals whose spouses work, as long as they meet specific requirements. Here\u2019s what you should know.<\/p>\n
If you are the working spouse and want to contribute to an IRA on behalf of your non-working spouse, you must:<\/p>\n
There are no age limits on making a Spousal Roth IRA contribution. (Such limitations used to apply to traditional IRAs, but that changed in 2019.)<\/p>\n
However, it\u2019s worth noting that Roth IRA account holders must have had a Roth for at least five years for their withdrawals to be tax-free. Younger taxpayers will not be affected, but older taxpayers should plan accordingly.<\/p>\n
The individual contribution limit for traditional and Spousal Roth IRAs in 2023 is the lesser of:<\/p>\n
If both of you are 50 or older, you can contribute those amounts to your and your spouse\u2019s IRAs for $14,000.<\/p>\n
It is important to note that these are the maximum amounts you can contribute for the year, regardless of how many IRAs you have. For example, if you have both a traditional and a Roth IRA, you could put $3,000 in each.<\/p>\n
There are no income limits on traditional Spousal Roth IRA contributions, though people with incomes above a certain level may be unable to deduct their contributions. IRS Publication 590-A explains these rules in detail.<\/p>\n
However, income limits exist if you want to contribute to a Spousal Roth IRA for your spouse (or yourself). For 2023, a married couple filing a joint tax return and earning up to $204,000 in modified adjusted gross income (MAGI) can contribute the total amount to their Roth IRAs.<\/p>\n
Couples earning between $204,000 and $214,000 per year can make partial Roth contributions. If their combined income exceeds $214,000, they are no longer eligible for a Spousal Roth IRA.<\/p>\n
There are several important rules to remember when it comes to spousal IRAs:<\/p>\n
There are no income limits on how much a couple can contribute to traditional IRAs. However, there are income limits that the couple must meet before opening a Spousal Roth IRA.<\/p>\n
The rules for traditional IRA tax deductions are the same for spousal IRAs. The amount that can be deducted from taxes for married couples with only one working spouse; depends on whether or not a workplace retirement plan covers the working spouse.<\/p>\n
If the working spouse is not covered by their employer\u2019s retirement plan, the couple can deduct the entire amount of their Spousal Roth IRA contributions from their taxes. If the earning spouse has an income from a workplace retirement plan, the following rules apply:<\/p>\n
Furthermore, if your income is less than $204,000, you can deduct the entire contribution amount. You may be eligible for a partial deduction if you earn between $204,000 and $214,000. However, if you earn more than $214,000, you cannot deduct any amount of your contribution from your taxable income.<\/p>\n
Because they provide tax-free withdrawals in retirement, spousal Roth IRA contributions cannot be deducted from your taxes. Consider a backdoor Roth IRA if your income is too high for a Roth IRA and you cannot remove your traditional IRA contributions.<\/p>\n