Ira Information

Spousal IRA Are Supplement To Other Plans

Spousal IRAs are plans that make us understand the significant role played by the non-employed spouse in the family. Spousal IRAs usually serve as a supplement to other retirement programs. Here, the contributions made by you are not deductible from the present income tax that you pay. However, the distributions in retirement are tax-free.

In order to set up a spousal IRA or contribute to an IRA for a spouse, you should be either an employed or a non-working spouse with little or no income at all.

You should have been legally wed to someone at the end of the particular tax year and also file a joint income tax return. Another condition is that you must be employed and get an earned income that amounts to what you need to contribute towards the IRA plan. However, if you desire to open a traditional IRA, the spouse should be under the age of 70½ whereas there are no age limits if you plan to open a Roth IRA.

Here are some conditions you should meet the following conditions to set up a spousal IRA: a) You must not exceed the specified compensation limits. b) You and your spouse should not exceed the age limit allotted for a traditional IRA. c) Try to take advantage of the catch-up limit in case, you and your spouse have crossed the age of 50. d) You must open the IRA account in your spouse's name. Here, you would only be acting as a beneficiary. It is very important to use the social security number of your spouse on the IRA. e) If you want to enjoy the benefits of a tax deduction scheme, you should open a spousal IRA and make a contribution prior to the date fixed for filing federal income tax for the particular tax year. f) Contributions to a traditional IRA are tax deductible up to the maximum contribution limits.

Here are some requirements for setting up a spousal IRA. a) A legal spouse b) An earned income c) A joint income tax return d) Earnings less than one hundred and sixty thousand dollars e) Age less than 70½ for a traditional IRA.

Here are some special tips to help you set up a spousal IRA successfully and without any difficulty.

a) Eligibility requirements: You should be legally married at the end of the tax year and also file a joint income tax return. You must be employed and earn at least the amount you require contributing towards the IRA. In case, you plan to open a traditional IRA, your spouse should be under the age of 70½. b) Compensation limits: There is no limit for the compensation amount you earn to contribute to a spousal IRA for a traditional IRA. However, for a Roth IRA, the earnings should not exceed $160,000 to contribute to a spousal IRA. c) Individual or joint account: The spousal IRA should be in your spouse's name. Joint accounts are not allowed. You may act as a beneficiary of this account but the account should be in your spouse's name.