Traditional and Roth IRAs are great ways to start saving for your retirement years because they offer some really attractive tax advantages. The Internal Revenue Service says a married couple may not have a joint IRA, but spouses can each have their own IRAs. In fact, the IRS has special rules to help you and your spouse do just that. There are some limitations you need to know about, though.
An IRA can only be owned by one person. Normally, you must have earned income to open and contribute to a traditional or Roth IRA. IRS rules make an exception for what it calls spousal IRAs. All you need for one or both spouses to have IRAs and make contributions is for one of you to have earned income, even if the other earns nothing at all. Spousal IRA rules require that a married couple file a joint income tax return. It is just possible to enroll if the income is equal or exceed the total IRA contributions for both parts.
An advantage of having two IRAs is that the couple can save twice as much money every year.
Spouses may contribute to each other’s IRAs. The usual contribution limit is $5,500 per year for each IRA. When one or both of you reach age 50, the limit goes up to $6,500. This means a married couple can contribute $11,000 per year. When one of you turns 50, the combined total is $12,000. When both of you are 50, the maximum contribution per year becomes $13,000.
The contribution limit for your IRA may be reduced to the lesser of two amounts if you earn less than your spouse. The first amount is simply the normal contribution limit discussed in the previous section. The second figure is the combined earnings of both spouses minus your spouse’s contributions to a traditional IRA, and your contributions, if any, to your spouse’s Roth IRA.
The IRS sets income limits that gradually phase out the amount you can contribute to a Roth IRA or the amount of a traditional IRA contribution that is tax-deductible. For the Roth IRA, as of 2018 the amount you can contribute starts go down when you adjusted gross income is $189,000 and is zero when your AGI reaches $199,000. You can always contribute to a traditional IRA, but the tax deduction is phased out if you are covered by a retirement plan at work starting when your AGI is $101,000 and reaches zero when AGI equals $121,000.