Spousal IRA Contribution and Deduction Limits

How Much Can You Contribute to These Unique IRAs for Couples?

A man and woman review paperwork together.
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Just because you don’t earn income from a job, that doesn’t mean you can’t save for retirement.

As long as your spouse has taxable compensation, they can set up a tax-advantaged retirement account on your behalf. This compensation can include salary, wages, commissions, or net income from self-employment.

This kind of account is referred to as a "spousal IRA," and it works similarly to traditional and Roth individual retirement accounts (IRAs). In fact, as a married couple, you can both contribute to your own separate IRA if you file taxes jointly, and at least one of you earns enough money to meet the funding rules for two IRAs. However, combined IRA contributions for both can’t be more than the lesser of either the taxable compensation reported on your joint tax return or the annual contribution limit on IRAs times two.

There is currently no age restriction for contributing to a traditional IRA. Likewise, there is no age restriction for contributing to a Roth IRA.

Spousal IRA Contribution Limits

The same annual limits apply to IRAs, whether they are set up on behalf of a spouse or not. In tax years 2020 and 2021, you can contribute up to $6,000 to a traditional IRA, or $7,000 if you're 50 or older, as long as your taxable compensation is at least that much.

The added $1,000 is a catch-up contribution designed to help people save more as they get closer to retirement age. A married couple could contribute $12,000 to two IRAs, or $14,000 if they’re 50 or older.

Spousal IRA Deduction Limits

Just like with other traditional IRAs, a couple can deduct the full contribution to a traditional spousal IRA from federal income taxes in tax years 2020 and 2021 if neither is covered by a defined-contribution plan, such as a 401(k) or an IRA, or a defined-benefit plan, such as a pension plan that's provided by an employer.

You may be considered covered by a plan if any contributions are made to your account.

If you are covered by any of these employer retirement plans, the amount you can deduct for your contribution to a spousal IRA is based on your modified adjusted gross income (MAGI).

For the 2021 tax year, the following ranges apply:

If your MAGI as a married couple filing jointly is... You can take...
$105,000 or less a full deduction up to the contribution limit
more than $105,000 but less than $125,000 a partial deduction
$125,000 or more no deduction

For the 2020 tax year, the income parameters were:

If your MAGI as a married couple filing jointly was... You could take...
$104,000 or less a full deduction up to the contribution limit
more than $104,000 but less than $124,000 a partial deduction
$124,000 or more  no deduction

In 2019, the income ranges were:

If your MAGI as a married couple filing jointly was... You could take...
$103,000 or less a full deduction up to the contribution limit
more than $103,000 but less than $123,000 a partial deduction
$123,000 or more  no deduction

Spousal Roth IRA Differences

The contribution limit for Roth accounts is the same as it is for traditional IRAs: your total contributions to traditional and Roth IRAs cannot exceed $6,000 in tax years 2020 and 2021 (or $7,000 if you're 50 or older).

However, Roth accounts get different tax treatment. Unlike traditional IRAs, which are funded with pre-tax contributions and are therefore tax-deductible, Roth IRA contributions are not tax-deductible, because they’re funded with after-tax contributions.

Moreover, the withdrawals you’ll eventually make from Roth IRAs will not be taxed again, whereas traditional IRA withdrawals are taxable.

Your eligibility to contribute to a Roth IRA for yourself or your spouse is based on your MAGI.

Here are the contribution limits for tax year 2021:

If your MAGI as a married couple filing jointly is... You can contribute...
less than $198,000 up to $6,000 ($7,000 if age 50 or older)
$198,000 or more but less than $208,000 a reduced amount
$208,000 or more zero

The Roth IRA contribution limits for tax year 2020 were:

If your MAGI as a married couple filing jointly was... You could contribute...
less than $196,000 up to $6,000 ($7,000 if age 50 or older)
$196,000 or more but less than $206,000 a reduced amount
$206,000 or more zero

The contribution limits for tax year 2019 were:

If your MAGI as a married couple filing jointly was... You could contribute...
less than $193,000 up to $6,000 ($7,000 if age 50 or older)
more than $193,000 but less than $203,000 a reduced amount
$203,000 or more zero

To determine the partial amount you may contribute in 2021 if you are in that middle band of incomes, first subtract $198,000 from your MAGI. Divide the resulting number by $10,000 if you are filing jointly. Then, multiply that number by the maximum contribution limit ($6,000 or $7,000, whichever applies). Finally, subtract that number from the maximum contribution limit.

Penalties for Excess Spousal IRA Contributions

You may have made excess contributions if you:

  • Contributed more than your contribution limit
  • Made an ineligible rollover to an IRA

In these cases, the excess amount will be taxed at 6% per year as long as it remains in the IRA, up to a maximum tax of 6% of the combined value of all your IRAs at the end of the year.

The best way to avoid paying the tax is to take out any excess contributions from the IRA by your tax-filing deadline, and to withdraw any income earned on the excess contributions.

Spousal IRA Contribution Deadlines

While it's often easier for people to make regular contributions throughout the year, you don't have to do that to take advantage of spousal IRA benefits. You can make a single lump-sum contribution up until the deadline to file your taxes for that particular tax year.

For tax year 2020, you have until May 17, 2021, to make a traditional or Roth IRA contribution.