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As couples navigate their retirement planning, spousal IRA opportunities can be a valuable tool for building a strong financial future. In simple terms, a spousal IRA is an individual retirement account that is opened and funded by one spouse on behalf of the other spouse who isn’t working, or who has limited income.

The contribution rules for spousal IRAs are the same as traditional IRAs, with all the standard limits on contributions, catch-up contributions, as well as various tax incentives. However, it’s important to note that both spouses must still file joint tax returns.

Spousal IRAs can be particularly useful when one spouse isn’t earning enough to contribute to an IRA. For instance, if one spouse is a stay-at-home parent, or if they’re working part-time or freelance, a spousal IRA can provide them with tax-advantaged retirement savings even when their income is minimal or nonexistent.

Another scenario where spouses can benefit from a spousal IRA is when one spouse’s 401(k) and other retirement plans are maxed out, and the couple still has additional income they’d like to set aside. As long as the working spouse has earned income that is equal to or greater than the total contributions made to their as well as their spouse’s IRAs, they’re eligible for this opportunity.

Beyond these scenarios, spousal IRA opportunities can provide tax-advantaged savings that can help couples maximize their retirement funds. With the compounding nature of interest and returns, even small contributions can grow over the years, giving the couple a comfortable nest egg for their golden years.

It’s important for couples to consider their long-term financial goals when determining the appropriate funding level for their spousal IRA. By speaking with a financial advisor or using online resources, they can determine the IRA limit, catch-up contributions, as well as potential tax breaks before opening the spousal IRA.

Ultimately, spousal IRA opportunities offer an option for couples to maximize their retirement contributions and can be an effective wealth-building strategy for their future. It’s a conversation worth having to ensure the couple is on the same page when it comes to setting their retirement goals.