What is a Spousal IRA? Well, first you need to know that an IRA (Individual Retirement Account) is a tool made for everyone to invest in their retirement. You need to have a job and a proper income in order to add funds to your retirement savings. There are four types of IRAs: Traditional IRA, Roth IRA, Simple IRA and SEP IRA.
The Spousal IRA is a type of Traditional or Roth IRA made of an individual for a spouse. An unemployed spouse can’t contribute to its IRA and this is why this kind of program was created. However, if you want to do this you must meet some requirements. First of all you have to be married. Then you have to file a joint income-tax return and you also have earned income or compensation for the amount you contribute to your own Individual Retirement Account.
If you chose a Traditional one your spouse must be under the age of 70.5 for the year when you make the contribution. For example if your spouse will make in 2010 the age restricted, you can’t contribute to her/his IRA for that year. But you can, however, contribute for the IRA for 2009. There are no age limits for Roth IRA.
There is also a compensation limit. There is no limit for the amount you have to earn to make a Traditional IRA, but it is for the Roth IRA. You can’t contribute to your spouse IRA if your contribution is more than $169,000. If it is below $159,000 you can contribute up to a certain limit for the year.
There is a contribution limit that is the same both for you and your spouse. For example for a year if the limit is $5,000 you can contribute with $10,000 both for you and your spouse. If you or your spouse meets the requirements, you should definitely consider making a spousal IRA a part of your portfolio.
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