Spousal IRAs provide for the opportunity of making contributions on behalf of your spouse. You can open a Spousal IRA account to your spouse in case s/he is unemployed or her/his income is too small and make contributions for their sake.
Spousal IRA Requirements
- Be legally married at the end of the tax year.
- Prepare and file a joint income tax return.
- One of the spouses should be employed and has earned enough to cover the desired contributions to the account.
Another requirement that should be met is with regards to the type of year you can open with regards to age.
- Traditional IRA - the spouse should not be older than 70 ½ years.
- Roth IRA - the spouse is not subject to any age limitations.
|Year||Under the Age of 50||Over the Age of 50|
|2006||The lesser of your earnings or $4,000||The lesser of your earnings or $5,000|
|2007||The lesser of your earnings or $4,000||The lesser of your earnings or $5,000|
|2008||The lesser of your earnings or $5,000||The lesser of your earnings or $6,000|
Under IRA conditions, you are allowed to deduct the amount of the contributions you have made to your spouse' account from your income tax return. But, this is allowed only if you don't participate in the retirement plan that is provided by your employer.
In the case of participating in your company's retirement plan and your average gross income is no more than $150,000 the full amount of your spousal IRA can be deducted from your income return. On the other hand, you can partially deduct your spousal contributions if the AGI is between $150,000 and $160,000.
If you have chosen a Roth IRA for your spouse, you will be able to contribute to his/her account only if your annual earnings don't exceed $160, 000.
Another requirement when opening a spousal IRA is that the account should be signed under the name of your spouse. Despite this, the opportunity of being his/her beneficiary still remains. IRA regulations disregard the fact that you are making the contributions and don't permit joint accounts.
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