Spousal IRA Contribution Limits for 2017

Find Out the 2017 Spousal IRA Limits

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If you have a spouse that is a stay-at-home parent in your family or you don’t have earned income from work, there is still a way to set aside money for retirement in a tax-friendly manner. The spousal IRA is an effective way to contribute the maximum amount to an individual retirement account each year. In order to qualify for a spousal IRA, you have to file jointly as a married couple.  In addition, the working spouse must earn enough to fund the IRA. According to the IRS, combined contributions can’t be more than the taxable compensation reported on your joint return.

Here is some additional information about the maximum contribution allowances to a spousal IRA in 2017:

Contribution Limits for Spousal IRAs in 2016

IRA contribution limits potentially change every year or two with inflation. In 2017, spousal IRA limits remain unchanged from the previous year. You can still contribute up to a maximum of $5,500 to a spousal IRA in 2017.  The spousal IRA contribution limit increases to $6,500 if you are age 50 or older. The extra allowance is due to a catch-up contribution, designed to help individuals save more as they near retirement age. 

Spousal IRA Deduction Limits 2017

You can deduct your full contribution to a spousal IRA in 2017 if you as a couple have an adjusted gross income (AGI) of $186,000 or less. You can deduct some portion of your contribution if your AGI is between $186,000 and $196,000 in 2017. If the working spouse doesn't have a retirement plan available through their employer, that spouse also has the ability to deduct the full amount up to the contribution limit. However, it is important to note that if the working spouse does have a plan available at work, deductions for contributions to the spouse's IRA phase out for AGIs between $99,000 and $119,000.

Although it is usually easier for many people to make regular contributions throughout the year, you do not have to do so to still take advantage of spousal IRA benefits. You can make one lump sum contribution up until the actual deadline to file your taxes for that particular year. As a result of this tax planning opportunity, you have until the tax filing deadline day on Tuesday, April 17, 2018, to contribute to a spousal IRA for the 2017 tax year. This provides an excellent last minute tax savings strategy and is one of the few ways to reduce your taxes for the previous year after that New Year’s Eve celebration has passed.

In reality, it is often easier to make regular IRA contributions to ensure that your nonworking spouse has their own retirement nest egg available to help generate income once you both reach retirement.

Roth IRA Limits 2017

As a working spouse, you can also put some of your income aside in a Roth IRA for the benefit of your nonworking spouse. Married couples filing jointly are eligible to contribute to a Roth IRA if you make less than $196,000. The contribution limit for a Roth is $5,500 in 2017 (your limit may be lower if your adjusted gross income is between $186,000 and $196,000). The biggest benefit of a Roth IRA is how the earnings are taxed after you reach age 59 ½ and have had the Roth account open for five years.

While there are no current income tax deductions available when you make a contribution to a Roth IRA, your earnings grow tax-free and are generally not taxed again when withdrawn at retirement. In addition, you may always withdraw your original contributions without any taxes or penalties since they were made using after-tax dollars.

There are many different ways to demonstrate to your nonworking spouse just how much you value their work. Saving for their retirement is one of those ways to communicate this message and increase your total household savings for retirement. Contribute to a spousal IRA and help to create a more secure and comfortable retirement for you both.

2017 Self-Employed IRA Limits

If your spouse earns a small amount of income from some type of freelance or contracting work, they could look into a self-employed IRA. In 2017, you can contribution up to $12,500 to a SIMPLE IRA, and an extra $3,000 in catch-up contributions if you are age 50 or older. Or you can contribute up to 25% of your gross income or $54,000 to a SEP IRA in 2017.

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