Spousal IRAs
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In the past few years, the rules have changed for spousal IRAs; the amount that is eligible for deduction has changed and the rules governing the eligibility of the “spouse” have changed. As a spouse, you can contribute to either a Roth IRA or traditional IRA. In order to contribute to a spousal IRA you must file your taxes jointly. What matters most is whether or not one of you or both of you participate in an employer-sponsored retirement plan.- In 2013, if both spouses work but neither participates in an employer-sponsored retirement plan, both can make deductible IRA contributions of up to $5,500 -- for a total of $11,000 -- regardless of the couple's adjusted gross income (AGI) level. The only limitation is that they must have at least $11,000 of earned income between them. Each spouse can contribute and deduct an additional $1,000 if he or she will be 50 or older.
- If both spouses work, and both participate in an employer-sponsored retirement plan in 2013, the restrictive AGI-based phase-out range of $95,000 to $115,000 applies to both spouses. For example, if the couple's joint 2012 AGI exceeds $115,000, neither spouse can make a deductible IRA contribution for that year. But if their joint 2013 AGI is $95,000 or below, they can both make $5,500 deductible contributions (for a total of $11,000). (Each spouse can contribute and deduct an additional $1,000 if he or she will be 50 or older.)
- Finally, if both spouses work but only one is a participant in an employer-sponsored retirement plan, the participant spouse's ability to make deductible contributions for 2013 is limited by the more restrictive AGI phase-out range of $95,000 to $115,000. The nonparticipant spouse is covered by the more liberal AGI phase-out range of $178,000 to $188,000. For example, say the couple's joint AGI for 2013 is $130,000, and the husband is a qualified-plan participant while the wife is not. He cannot make a deductible IRA contribution because the AGI exceeds the $115,000 top end of the phase-out range that applies to him. However, the wife can contribute and deduct up to $5,500 ($6,500 if she will be 50 or older) because the couple's joint AGI is below the $178,000 starting point for the phase-out range that applies to her.
