994. This week, Laura reviews updated rules for using a spousal IRA, who can use one, and how they help keep your own retirement account growing.
994. This week, Laura reviews updated rules for using a spousal IRA, who can use one, and how they help keep your own retirement account growing.
Find a transcript here.
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Think you can’t save for retirement because you don’t have any earned income right now? Well there’s an often overlooked benefit known as a spousal IRA that married couples can use to boost retirement contributions.
This podcast will review the spousal IRA rules and what’s changed for 2026 that allows more couples than ever to qualify. Whether you’re a stay-at-home parent, a student, or maybe between jobs, I’ll explain how to keep your retirement nest egg growing, even without an income.
Welcome back to Money Girl everyone–I appreciate you downloading the show! I'm Laura Adams, an award-winning author, on-camera spokesperson, female money speaker, and founder of The Money Stack, that's my Substack newsletter.
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What is a spousal IRA?
As you know, I'm a huge proponent of using retirement accountments. They are terrific ways to save for retirement, but you typically must have earned income, such as a salary or self-employment income to use one. But as I mentioned, there's an important exception: a spousal IRA (individual retirement account).
Now a spousal IRA isn't a different type of IRA–it’s a rule that allows a married person with earned income to fund their spouse's IRA. But the catch is that you can only have a spousal IRA if you're married and file taxes jointly.
Note that an IRA can never be owned jointly, even if you're married. So a spousal IRA must be in the name of the nonqualifying individual even when it’s funded by their spouse’s earned income. So again it's a spouse with income who is going to put money or the household's money into a person's IRA who does not have their own qualifying income.
RELATED: Can you contribute to a 401(k) and an IRA in the same year?
What are the benefits of an IRA?
To understand the benefits of a spousal IRA, we need to step back and understand the general benefits of IRA accounts and how to use them. With a traditional IRA, contributions have to be made on a pre-tax basis. And that's great because it reduces your taxable income for the year.
But when you make traditional retirement account withdrawals in retirement, that's when you pay ordinary income tax on both contributions and investment earning that you pull out of the account. In addition, starting at age 73, you must make required minimum distributions (RMDs). And starting in 2033, the RMD rule will change and bump up that required age to 75.
The other type of IRA is a Roth IRA. With a Roth IRA, contributions have to be made on an after-tax basis, which means they don’t give you any benefit in the current year. You do pay taxes on the contributions you make to a Roth IRA. However, the big benefits come in the future. When you take withdrawals in retirement, they’re not taxed. Neither your contributions nor your earnings are going to be subject to tax, if you owned the account for at least five years. In addition, Roth accounts have no RMDs, so that means you can leave the money in the account indefinitely and that gives you more flexibility. You know it's certainly nice to have income in retirement that will not be subject to tax. Plus it gives you more tax planning opportunities.
Withdrawals of any untaxed funds from a retirement account before age 59.5 are subject to income tax plus an additional 10% early withdrawal penalty.
Therefore, in general, you shouldn't put money in a retirement account that you might need to spend. It's certainly best to avoid tapping a retirement account early so it can reach its full growth potential.
LISTEN ALSO: How to use a mega backdoor Roth conversion
How much can you contribute to an IRA?
For 2026, you can contribute an amount equal to your qualifying income up to $7,500, and that's a $500 increase from 2025. You can also put up to $8,600 in the account if you’re over 50 in either a traditional or Roth IRA or a combination of both of them.
You can do half in one and half in the other or any proportion you like. However, there is an income limit to qualify for a Roth IRA that I'll review in a moment.
So let's say, if you're a student or senior working part-time and earning maybe $5,000 in a year. In that case, the most you could contribute is $5,000 to an IRA. But let's say you're 40 and earn $100,000. In that case, the most you could contribute for 2026 is $7,500.
You can make IRA contributions regardless of your age. However, you generally must have taxable compensation. So this could be a salary, wages, commissions, tips, bonuses, or net income from self-employment. Other types of income like alimony and investment earnings, don't count when it comes to compensation for IRA contribution purposes.
READ ALSO: 4 ways to fund a Roth no matter your income
How does a spousal IRA work?
As previously mentioned, if you’re married and file a tax return jointly, you qualify for a spousal IRA. So let me give you an example of how it could work.
Let's say Jenny and Lenny are under 50, and they decide to start a family. If they file taxes together and one wants to be a stay-at-home parent. In that case, each can fully fund an IRA, if they have a household income of at least $15,000, they could put $7,500 in Jenny’s IRA and $7,500 in Lenny’s IRA. Or if one spouse is over 50, the couple could put $16,100 ($7,500 in one of them + $8,600 in the other IRA). Or, if they both are over 50, they could contribute up to $17,200 ($8,600 in each of their IRAs).
So the spousal IRA contribution can go to an existing or a new IRA. You can also use it to max out an IRA if you have too little earned income. For instance, let's say Jenny earned $4,000 from a side gig, Lenny’s income could be used to max out her IRA. So she would only be eligible to put in $4000 based on her own income. But because Lenny has income, and they're married and file taxes jointly, he could bridge the gap to get her up to the maximum of $7500.
So don't miss the opportunity to max out an IRA if you're married, and you're not working or let's say you're earning less than the annual contribution limit for your age.
What are the Roth IRA income limits?
I mentioned that there’s an income limit to qualify for a Roth IRA. For 2026, the limit increased, making more people eligible for these terrific accounts. Here are the updated limits:
So if you're under those limits, you qualify to make contributions to a Roth IRA.
Another important rule is that when your spouse participates in a workplace retirement plan, like a 401(k) or 403(b), your ability to deduct traditional IRA contributions may be reduced or eliminated based on your spouse's income, so this typically applies to high earners.
But there's no conflict with maxing out a workplace retirement plan and a Roth IRA in the same year because they have different tax rules. So you have to qualify based on those income limits that I just reviewed.
LISTEN ALSO: Too rich for a Roth? 3 legal ways to have one
How to open a spousal IRA
Remember that for IRAs, you have until your tax filing deadline to make contributions for the previous tax year. So if you want to max out a spousal IRA or a regular IRA for 2025, you have until April 15, 2026.
As I mentioned, if you already have an IRA, you can use it for spousal IRA contributions if you're eligible. You can also open a new IRA with any financial institution or investing firm using these four steps:
1. Choose a brokerage firm: You might choose the same bank or provider for any other investments you own to keep your accounts together. Or you can choose a new financial institution. Just be sure to compare their fees and look at investments available.
2. Submit required documentation: You must share personal identifying information, such as your Social Security number and address.
3. Fund your IRA: Once your retirement account is open, you can connect it to a bank account and set up a one-time transfer or recurring deposits. Just be sure your total annual contributions won’t exceed the annual limit based on your age.
4. Choose your investments: Funds you contribute to an IRA can't grow unless you allocate them to investments. I recommend choosing diversified, low-cost index funds that spread your money across a broad range of securities, reducing investment risk.
Whether you’re married and are a full-time student, taking care of dependents, or looking for your next job, don’t miss the opportunity to keep your IRA nest egg growing with spousal contributions. Even if you had zero income, you can still max out a traditional or Roth IRA, in an amount based on your age and household income.
That's all for now. I'll talk to you soon. Until then, here's to living a richer life!
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