What Is a Spousal IRA?
Key takeaways
A spousal IRA allows a working spouse to make IRA contributions on behalf of a spouse who has little or no income.
It can help married couples stay on track for retirement when one spouse temporarily stops working. That might happen if they take time off to care for children or tend to a long-term disability.
You’ll have to meet spousal IRA rules to get the tax advantages.
Tom Gilmour is a senior director of Planning Experience Integration for Northwestern Mutual.
The path to a financially secure retirement usually requires some strategic planning. A married couple will need to decide when they’d like to stop working, how they want to spend their retirement and how much it’s going to cost. Taking advantage of tax-friendly retirement accounts can help workers maximize their savings, but most require you to have earned income to contribute. That can create a hurdle for spouses who prefer to stay home or need to step out of the workforce to care for children or address long-term health care needs.
Enter the spousal IRA. Here’s how couples can use one to supercharge their retirement savings in a tax-advantaged way.
What is a spousal IRA?
Let’s start with individual retirement accounts, or IRAs. They can be powerful savings tools, especially if you don’t have a workplace retirement plan. They offer some attractive tax benefits and allow your nest egg to earn compound interest and grow over time. Below are the two main types of IRAs, which you can open and fund on your own. A spousal IRA can be either of the two main types.
Traditional IRAs
Contributions (the money you put in) may be tax-deductible. If so, it can reduce your taxable income during your working years. You can invest money contributed to a traditional IRA in a variety of assets, from stocks and bonds to mutual funds and exchange-traded funds (ETFs). You won’t pay taxes until you make withdrawals—typically in retirement.
Roth IRAs
While you can’t deduct Roth IRA contributions from your taxable income, you can withdraw your contributions at any time without paying taxes or a penalty. You can also draw on investment earnings free and clear if you’re at least 59½ and have had the account for five years or more. But Roth IRAs come with income limits.
What is the difference between a spousal IRA and a regular IRA?
You typically need to have earned income to contribute to an IRA, but a spousal IRA is the exception. It works like a traditional or Roth IRA—and offers the same tax advantages. But a spousal IRA is designed for spouses who have little or no income. The account is in their name, but the working spouse makes contributions on their behalf.
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Spousal IRA Rules
If you’re interested in using a spousal IRA to save for retirement, you’ll want to understand spousal IRA rules. Here’s what you need to know.
Who is eligible for a spousal IRA?
To open a spousal IRA in your name, you need to meet the following rules.
- You’re legally married.
- Your spouse has taxable income.
- You file a joint tax return.
- For a Roth IRA, your income falls under a limit (described below).
To contribute the full amount to a spousal Roth IRA, your joint income, specifically your modified adjusted gross income, must be less than $236,000 in 2025. If your joint income is just above that, you have some flexibility. Married couples with joint incomes between $236,000 and $246,000 can contribute some money but not the full amount.
If you’re close to the top end of the joint income limit, you may want to talk with your financial advisor about whether a spousal IRA makes sense. You may quickly exceed eligibility if your spouse is promoted, gets a larger bonus or gets a salary increase.
Couples who earn more than that cannot contribute to a Roth IRA.
Traditional IRAs aren’t subject to income limits to open them, but limits apply when it comes to deductions for federal taxes.
What are the spousal IRA contribution limits?
If you’re making a spousal IRA contribution, the annual contribution limits are no different than the limits for traditional and Roth IRAs. In 2025, you can put in up to $7,000 across all your IRAs (or $8,000 if you’re 50 or older). That means your working spouse could contribute the maximum amount to their own IRA and your spousal IRA—effectively doubling the total contribution amount. So, if you’re under 50, your spouse could contribute up to $14,000 between both IRAs.
One other thing: Your total annual spousal IRA contribution cannot exceed your combined taxable income, though this shouldn’t be an issue. Most couples earn more than $7,000 to $8,000 per year.
Who owns a spousal IRA?
The most common scenario for opening a spousal IRA is that one spouse doesn’t make an income. Years ago, that was often a wife staying home to raise the kids while a husband worked full time. But the concept of a spousal IRA is not limited to traditional gender roles. It can apply to any married couple when one spouse is not employed or has a significantly lower income. This financial tool allows both spouses to have the financial security of a retirement account.
Keep in mind that if you open a spousal IRA in your name, the account belongs to you. That’s true even if your working spouse is the one putting money into it. However, the account might be considered a joint marital asset during a divorce (more on this shortly).
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Let’s get startedHow do spousal IRA withdrawals work?
Spousal IRA distributions work just like any other IRA. If you have a traditional IRA, withdrawals will count as taxable income. Although there are some exceptions, a 10 percent early withdrawal penalty typically applies to distributions taken before age 59½, and you’ll need to start taking RMDs beginning at age 75 (or 73 if you were born in 1959 or earlier).
For Roth IRAs, you can withdraw your contributions at any time without being hit with taxes or penalties. The same goes for investment gains if you’re 59½ and have had the account for at least five years. And there are no RMDs for a Roth IRA while the original account holder (the nonworking spouse) is living.
Can you roll over a spousal IRA?
You don’t necessarily need to roll a spousal IRA into another account. If the nonworking spouse eventually gets a job and begins earning income, they can simply contribute to the IRA themselves.
However, you might choose to convert a traditional IRA into a Roth IRA if you expect to be in a higher tax bracket in retirement. The conversion amount will be taxed at your current tax rate. You’ll then enjoy tax-free distributions when you retire.
If your partner owns a spousal IRA and passes away, you can roll those funds into your own retirement account. Alternatively, you could transfer that money into an inherited IRA. Either way, it’s wise to work with a financial advisor who can guide you on withdrawal rules and potential tax repercussions.
What happens to a spousal IRA in a divorce?
The answer depends largely on your state, which will determine the division of marital property. If you live in a community property state, IRA funds are typically split down the middle. But if you live in an equitable distribution state, spousal IRA assets will be divided in whatever way is deemed most fair. Or you and your ex-spouse might negotiate something different.
If the two of you decide to split your retirement assets, include the details in the divorce decree or separation agreement. Then you can complete an IRA rollover from your spousal IRA to your ex-spouse’s retirement account. This may be to your advantage compared with cashing out a portion of your IRA funds and giving it directly to your ex-spouse—which could trigger a tax bill and an early withdrawal penalty.
Should you set up a spousal IRA?
Whether a spousal IRA makes sense for you will depend on your personal situation. It could be a good way to build up extra tax-advantaged retirement savings, especially if one spouse is temporarily out of work. Ideally, you’ll want to max out the spousal IRA and the working spouse’s retirement accounts to get the maximum tax benefits.
If you think a spousal IRA might be a good fit, your Northwestern Mutual financial advisor can provide personalized guidance and help you create a strategy that fits your retirement goals.
This publication is not intended as legal or tax advice. Financial Representatives do not render tax advice. Consult with a tax professional for tax advice that is specific to your situation.
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