Retirement
The Spousal IRA Strategy: How One-Income Couples Can Double Their Retirement
The Spousal IRA Strategy: How One-Income Couples Can Double Their Retirement Space
CORE INSIGHTS
- Double Capacity: Even if only one spouse works, a married couple can fund two IRAs (one for each), doubling the annual contribution limit to $14,000 (2025).
- Legal Ownership: The non-working spouse owns the account. It provides financial independence and security within the marriage. IRC § 219(c)
- Deduction Window: Non-working spouses have a higher income limit for Traditional IRA deductions (~$230k), creating a hidden tax break. IRC § 219(g)
Many one-income families believe they are limited to just one IRA contribution. This is false. The IRS “Spousal IRA” rule allows the working spouse to fund an account for the non-working spouse. It is the easiest way to double your tax-advantaged savings instantly.
| Requirement | Standard IRA | Spousal IRA |
|---|---|---|
| Account Owner | Earner | Non-Earner |
| Income Source | Personal Wages | Spouse’s Wages |
| Filing Status | Any | MFJ (Required) |
Visualizing the Capacity Gap
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*Figure 1: Wealth Accumulation. Using two accounts ($14k/yr) vs one ($7k/yr) creates massive divergence.*
Strategic Action Steps
1
Verify Income
Ensure total earned income > total contributions. (e.g., to put in $14k, the earner must make at least $14k).
Ensure total earned income > total contributions. (e.g., to put in $14k, the earner must make at least $14k).
2
Check Deduction Limits
The non-working spouse can deduct Traditional IRA contributions up to ~$230k household income, even if the earner is covered by a 401(k).
The non-working spouse can deduct Traditional IRA contributions up to ~$230k household income, even if the earner is covered by a 401(k).
3
Execute
Open the account in the non-earner’s name. Fund it from the joint checking account.
Open the account in the non-earner’s name. Fund it from the joint checking account.
The Bottom Line: Who Should Choose What?
- Choose Traditional: If household income is $123k – $230k (Deduction Arbitrage).
- Choose Roth: If income < $230k and you want tax-free growth for both.
Can a non-working spouse open an IRA?
Yes, under the ‘Spousal IRA’ rules. As long as you file jointly and have enough earned income.
Does the Spousal IRA share the limit?
No. The limit is per person. $7,000 + $7,000 = $14,000 total capacity.
Are there income limits?
Yes. While anyone can contribute, deductibility (Traditional) and eligibility (Roth) are subject to MAGI limits.
Disclaimer: Informational purposes only. Consult a professional.