IRAs for Non-Working Spouses

One of the major downsides of being a military spouse is that it makes it more challenging to maintain a career or even just keep a job.  According to Blue Star Family’s 2014 Military Lifestyle Survey, 58% of spouses not currently working would like to be employed.  A lack of employment limits retirement savings options for many military spouses.  In a perfect world, every individual would have their own, independent retirement savings and not be reliant upon the savings or benefits of their husband or wife.

Thankfully, there is one important way in which even non-working people can contribute to a tax-advantage retirement savings plan:  The Spousal Individual Retirement Arrangement (IRA).

Thanks to the sensibleness of federal law, working spouses are permitted to contribute to IRA accounts on behalf of their non-working spouses.  This is the only time that contributions can be made to an IRA without earned income, but the working spouse must make enough to cover the contributions to both parties IRA accounts.

About The Name

In real life, no one calls it a Spousal IRA, except maybe policy folks in Congress and at the Internal Revenue Service (IRS).  It is just a regular IRA account that is funded by contributions from a working spouse.  I’d like to think that all banks and investment company employees are super-smart, but it is possible that if you call and ask about a “spousal IRA,” you might confuse people.

Are You Eligible?

The eligibility requirements for the spousal IRA are simple:

  • You must be married
  • You must file your federal income tax as married filing jointly
  • The working spouse must have enough earned income to cover the IRA contribution for both parties.
  • If contributing to a traditional IRA, the non-working spouse must be under 70 1/2 in the year of the contribution.  There are no age restrictions for contributions to a Roth IRA.

Contribution Limits

For 2015, the limit on IRA contributions is $5,500 per person, with a $1,000 additional catch-up contribution permitted for those age 50 and older.

Why Contribute?

Contributing to a spousal IRA for a non-working spouse doubles the amount of IRA savings that your family can build.  Depending on your income bracket and the type of IRA account you choose, there can also be significant tax benefits for contributions to IRA account.

More importantly, contributing to an IRA for a spouse who does not work outside the home provides financial security for that spouse, and recognizes the importance of their contributions to the family.  If you’re the working spouse, don’t underestimate how much this action may mean to your stay-at-home husband or wife.  As a friend said to me, “Contributing to my IRA is one of the ways that my husband shows that he loves me.”

I feel strongly that every person should have their own retirement savings, and a spousal IRA account is a great way to build retirement savings even for a spouse who is doing their work on the homefront and not in a paying job.  If you don’t have an IRA for the stay-at-home spouse in your family, look into opening one TODAY!


About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.
  • Alex

    Hi! I rented an apartment and have two of the rooms rented out. I have my orders for BMT 1st of September. I had told them from the on set that it is a temporary stay for them because I would have to leave for BMT after which my fiance would be joining me. I have given them more than three months notice and a reminder two months ago. Their agreement which they signed ended in August 11th but they are yet to leave. My 11 year old lives with me but would be going to my sister’s when I am off to BMT. Someone told me I cannot ask them out because they pay their rent. I am not asking them out but simply asking them to fulfil their part of our agreement. What do I do? I need answers and I really do fast. I would appreciated any quick response.

    • Guest contributor

      Contact a lawyer who specializes in landlord/tennant disputes.

  • Carl

    As a non-working spouse, I contribute to a Roth IRA each year. Can I also set up this Spousal IRA if I might all the other requirements you listed?

    • Guest contributor

      Best to contact a currently licensed CPA (Certified Public Accountant).

    • 4M

      If you’re married, and not working but making IRA contributions you’re already contributing to a spousal IRA Carl, you just didn’t know that’s what it was called.

  • 4M

    Interesting take on equality.

    I’m a huge proponent of equal personal spending money between spouses, but never thought of IRA’s as a his/hers thing.

    Before the Roth TSP came out we both maxed out ROTH IRA’s and called it a day, once the ROTH TSP came out all our retirement savings went there and will continue to do so until we max it out (at which point we will start doing ROTH IRA’s again).

    Certainly put it away, but does it really matter who’s name is on what account? In divorce doesn’t it all get carved up anyways?

    • Kate

      In a perfect world, things do get divided up equitably in a divorce. But from what I’ve seen here, that doesn’t seem to be the norm.

      FAscinating stuff…