Spousal Roth IRA Contributions

Spousal Roth IRA Contributions

Wedding rings and moneyIf you’re married and filing jointly with your spouse, even if only one of you has job with income, you might both be eligible to contribute to a Roth IRA using the spousal IRA contribution rules.

You need to have compensation or earned income to make a Roth IRA contribution. Compensation, including earned income, is income you earn from your job. It includes wages, commissions, and income from your self-employed business. Even if you are retired but have a part-time job, the income from your part-time job could be used to make a Roth IRA contribution.

Next your adjusted gross income has to be within certain limits. For 2014, the combined income for individuals married filing jointly return has to be between $181,000 -$191,000. For 2015, those figures rise to $183,000 – $193,000. What this means is that if your income is less than $181,000 for 2014, you both can potentially make the maximum Roth IRA contribution ($5,500 if you’re under age 50 or $6,500 if age 50 or older). Know that there is no age limit to make a Roth IRA contribution, so even if you’re older than age 70 ½, you can still make a contribution as long as you have compensation and your income is within the IRS specified range.

Under the spousal IRA rules, if only one of you has compensation, you can make an IRA contribution for your spouse who has little or no compensation. For example, let’s say that you and your husband file jointly and are both in your 70s. You make $15,000 from a part-time job, but your husband has no compensation of his own. Your combined MAGI for 2014 is well below $181,000 so you’re both allowed to make a Roth IRA contribution up to $13,000 ($6,500 contribution to your own Roth IRA and another $6,500 contribution to a Roth IRA for your husband). Ca-Ching!

Special thanks to Joe Cicchinelli, IRA Technical Expert at Ed Slott and Co. for this great example!

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