Spousal IRA Contribution and Deduction Limits for 2019
You can set aside money for your spouse's retirement in a tax-friendly way even if they are a stay-at-home parent or otherwise don’t have earned income from work. A spousal IRA is an effective way to contribute toward the future financial wellbeing of your spouse who does not work outside the home.
To qualify to invest in a spousal IRA, you must file your taxes jointly as a married couple and the income-producing spouse must earn enough money to fund the IRA. Combined IRA contributions for both spouses can’t be more than the taxable compensation reported on your joint tax return, and your spouse must be younger than 70 1/2. The age rule does not apply to Roth IRAs.
Spousal IRA Contribution Limits
You can contribute up to $6,000 to a spousal IRA in 2019 or $7,000 if you're 50 or older. This extra allowance is a catch-up contribution that's designed to help individuals save more as they get closer to retirement age.
Spousal IRA Deduction Limits
You can deduct your full contribution to a spousal IRA from your federal income taxes in 2019 if you are not covered by a defined contribution plan, such as a 401(k), that's provided by your employer. (It's not necessary for you to have made contributions to the plan to be considered covered by it.) Your employer also must not have made contributions to a SEP, SARSEP, or SIMPLE IRA that was set up as your employee retirement plan.
If you are covered by either of those types of employer retirement plans, your ability to deduct your contribution to a spousal IRA is based on your modified adjusted gross income (MAGI).
|If your MAGI is ...||... you can 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.|
Source: Internal Revenue Service
Roth IRA Differences
Roth IRA contributions are not tax deductible because, by definition, Roth IRAs are funded by after-tax contributions. The withdrawals you make from Roth IRAs are not taxed. (Traditional IRAs are funded by pre-tax contributions, and withdrawals from them are taxed.)
Your eligibility to contribute to a spousal Roth IRA is based on your MAGI.
|If your MAGI is ...||... you can contribute ...|
|less than $193,000||up to the contribution limit.|
|more than $193,000 but less than $203,000||a reduced amount.|
|$203,000 or more||zero.|
Source: Internal Revenue Service
To determine the partial amount you may contribute if you are in that middle band of incomes, first subtract $193,000 from your MAGI. Divide the resulting number by $10,000. Then multiply that number by the maximum contribution limit. Finally, subtract that number from the maximum contribution limit.
A Lump-Sum Contribution
It's often easier for people to make regular contributions throughout the year, but 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 year. So for 2019, you have until April 15, 2020.
If you have any questions regarding spousal IRAs, you should seek the advice of an accountant or tax attorney.
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