Spousal IRA is a strategy you can use when you have a single income household but file taxes jointly. It allows you to put money in an ira for the non-working spouse without the earned income requirement. The irs will allow you deduct the contribution, giving you a tax advantage.

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When it comes to saving for retirement, individual retirement accounts (IRAs) can be a powerful tool. They allow you to save money on a tax-advantaged basis, meaning you can save more money over time. But did you know that you can also open an IRA on behalf of your spouse? This is known as a spousal IRA, and it can be a great way to jumpstart your retirement savings as a couple.

But before you open a spousal IRA, it’s important to understand the limits that apply. These limits vary depending on your income, filing status, and other factors. Let’s take a closer look at what you need to know.

First, it’s important to understand that you can only contribute to a spousal IRA if you file a joint tax return. If you file separately, you won’t be eligible to contribute to a spousal IRA. Additionally, you’ll need to have earned income that’s equal to or greater than the amount you want to contribute. This means that if you want to contribute $6,000 to a spousal IRA in 2021, your spouse will need to have earned at least $6,000 in income during the year.

Assuming you meet these requirements, you’ll be able to contribute up to $6,000 to a spousal IRA in 2021. If you’re age 50 or older, you can contribute an additional $1,000 as a catch-up contribution. That means a couple can contribute up to $14,000 to IRAs in 2021 ($6,000 each, plus $1,000 catch-up contributions each).

It’s worth noting that these contribution limits are per couple, not per account. This means that if you and your spouse both have traditional IRAs and you’re both under age 50, you can each contribute up to $6,000 to your own account, or you can split the contribution and each contribute $3,000 to your own account and $3,000 to a spousal IRA. If you’re both over age 50, you can each contribute up to $7,000 to your own account, or you can split the contribution and each contribute $4,000 to your own account and $3,000 to a spousal IRA.

One important thing to keep in mind is that spousal IRAs do not have any impact on the contribution limits for regular IRAs or employer-sponsored retirement plans. For example, if you contribute $6,000 to a spousal IRA in 2021, you can still contribute up to $19,500 to a 401(k) or similar retirement plan, as long as you have enough earned income to support those contributions.

In addition to contributing to a spousal IRA, there are a few other things you can do to maximize your retirement savings as a couple. These include:

1. Maximizing your contributions to employer-sponsored retirement plans: If you and your spouse both have access to employer-sponsored retirement plans like 401(k)s or 403(b)s, be sure to contribute as much as you can. These plans offer higher contribution limits than IRAs, so they can be a powerful tool for boosting your retirement savings as a couple.

2. Optimizing your investments: When opening a spousal IRA or making other retirement investments, be sure to choose investments that will work well together as a couple. This means diversifying across different asset classes and types of investments to minimize risk and maximize return.

3. Starting early: The earlier you start saving for retirement, the better off you’ll be. Even if you can only afford to contribute a small amount to a spousal IRA each year, starting early will give your savings more time to grow and compound over time.

Ultimately, spousal IRAs can be a great way for couples to increase their retirement savings. By understanding the contribution limits and other rules that apply, you can make the most of this valuable retirement savings tool.