Retire with Comfort and Stay Happily Married
In general, if you are an unemployed individual you are not authorized by the law to make contributions in retirement plans to include Individual Retirement Accounts or IRAs since you do not have an eligible income. But, if you have a spouse who are employed and can meet the specific requirements mandated by the law, then your spouse can carry out IRA contributions in your behalf. This retirement plan is referred to as Spousal IRA.
The established eligibility requirements for this IRA should be met before contributions can be possible. You and your partner should be married and should be able to file your joint income tax return. Your spouse should also have compensation or earned profits totaling to the amount he or she contributed to his or her IRAs in the minimum. There is also an age limit for the spousal retirement plan, wherein if your spouse has decided to put funds in your Traditional IRA, you must be under 70 ½ years of age during the year when the contribution is being completed. For Roth IRAs, there are no limits set on the age.
Spousal IRA Requirements
When it comes to the compensation limit, Spousal IRA does not place cap on the amount that your spouse may earn to be able to fund your Traditional IRA. On the other hand, for Roth IRA, your spouse should have a compensation that is more than $169,000, so he or she can make contribution for both of your Individual Retirement Accounts. If your spouse’s compensation is categorized below $159,000, he or she will be allowed to contribute up to the set limit permissible for that particular financial year.
When your spouse’s earnings reach $159,000, the limit on his or her contribution will be reduced and phased out until your spouse reaches the $169,000 and when his or her compensation comes between $159,000 and $169,000, your spouse can seek the assistance of a tax professional, who will distinguish the maximum amount that your spouse can contribute in both of your Roth IRAs.
For the contribution limit, your spouse can make contributions equal to 100% of his or her compensation or the IRA contribution limit for a particular tax year, whichever is lesser than the IRA. It is important for you and your spouse to note that the contribution limit covers both of your IRAs. This is also influenced by your spouse’s age, whereas when he or she is aged at 50 or older by the year’s end for which the contribution are being performed, the limits correspondingly increase by the catch-up amount.
There are certain rules that your spouse should accomplish to appropriately fund the Spousal IRA. Keep in mind that all contributions under this retirement plan should be made in cash, though checks are also accepted. You should also discern that securities, stocks and mutual funds are not considered as an IRA participant contribution.
Additional Spousal IRA Help
It’s a great relief to know that aside from love and devotion retirement assets could also be shared between you and your spouse when retirement years come your way. This provides you and your partner with financial security while you also stay happily and contentedly married.
For additional assistance with IRA and retirement, visit the following articles:
Can You Contribute to a Roth IRA for Your Spouse?
Do you have a Spousal IRA setup already?See results without voting
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