If you're married and your spouse isn't working (or earns a very modest income), you can utilize several investment vehicles to help him/her save for retirement. One such option? A spousal IRA.

What is an IRA?

Before we delve into spousal IRAs, it’s important to understand how IRAs work in general. An individual retirement account is a tax-advantaged investment account designed to help you save for retirement. After opening and funding an IRA, you can invest the balance in a variety of assets such as stocks, bonds, ETFs, and mutual funds that best align with your risk tolerance and goals.

Several types of IRAs do in fact exist, but the two most common are traditional and Roth IRAs.

The former are often considered “tax-deferred” accounts, meaning they’re generally funded with pre-tax dollars, earnings in the account grow tax-deferred, and you only pay taxes upon withdrawing funds in retirement (you can also fund these with post-tax dollars, as with spousal IRAs, in which you simply deduct tax return contributions—we’ll discuss this shortly).

On the other hand, Roth IRAs provide tax benefits at a different time. Contributions are typically made with after-tax dollars, earnings grow tax-free, and you typically pay no taxes when withdrawing money in retirement (provided you’ve owned the account for at least five years).

What is a spousal IRA?

Also known as a Kay Bailey Hutchison Spousal IRA—named after the former U.S. senator who championed its creation—a spousal IRA isn’t a special type of account but in fact just your typical Roth or traditional IRA with the same set of rules. The sole difference lies in the fact that a spousal IRA is opened by your spouse, in his or her name, and has a few distinct eligibility requirements we’ll discuss next.

Spousal IRA rules and eligibility requirements

Ordinarily, you must have earned income (e.g., wages, salaries, or tips) to contribute to an IRA. A spousal IRA, however, is one exception to this IRS provision as it allows a working spouse to contribute on behalf of a married partner who brings in no (or very little) income.

To qualify for spousal IRA contributions, two criteria must be met: you must file a joint tax return (married and filing jointly) with your spouse, and the working spouse’s earnings must reflect at least as much as is contributed to the couple’s IRAs. For example, if both partners have an IRA and want to contribute the maximum amount allowed for each account, the combined taxable income must equal at least $14,000 to contribute $7,000 (the 2025 maximum contribution limit) to each IRA.

Additionally, if either partner is over age 50, he/she can make an extra $1,000 contribution to an IRA (either Roth or traditional) via “catch-up contributions”: meaning if you make the full basic and catch-up contributions to each IRA, your combined taxable income must equal at least $16,000.

Funding a spousal traditional IRA with after-tax dollars

After-tax dollars are contributed to spousal traditional IRA accounts, but whether or not these are tax-deductible depends on income and whether the working spouse has a retirement plan with his/her employer. For example, if the working spouse does not have a retirement plan, the couple can deduct the full amount of their IRA contributions. However, should the working spouse indeed have a retirement plan, contribution deductibility is determined by the couple's modified adjusted gross income (MAGI) as reported on their joint tax return.

Specifically, if their reported income totals $146,000 or more (in 2025), contributions are not tax-deductible; reported income less than $126,000, meanwhile, makes the couple eligible to deduct the full amount of their contributions (with any reported income between these IRS thresholds allowing for only partial deductions).

Funding a spousal Roth IRA

Spousal Roth IRAs are funded with after-tax dollars, meaning contributions are not tax-deductible—but tax-free withdrawals during retirement are a key benefit here.

A potential constraint based on income limits does impact Spousal Roth IRAs, however (with the forthcoming figures based on 2025 limitations). For example, couples who earn $246,000 or more don’t qualify for a Roth IRA, those with incomes between $236,000 and $245,999 can only make partial contributions, and those who earn less than $236,000 can contribute the maximum amount allowed ($7,000 or $8,000, for those over age 50).

Spousal IRA benefits

Spousal IRAs are often an essential retirement-savings tool for couples, especially when one spouse has stepped away from the workforce to raise children or care for a family member, given their tax benefits specifically.

While traditional IRA contributions are typically tax-deductible (and you don’t pay taxes on earnings until withdrawing funds), Roth IRAs are funded with after-tax money—meaning both earnings and qualified withdrawals made during retirement, generally after reaching age 59½, are tax-free.

Combining these tax advantages with the power of compound interest can significantly boost retirement savings. For example, if you contribute $500 a month to a spousal IRA and investments yield an average return of 5% (which is in fact conservative compared to average S&P annual returns of 13.316% over the last 10 years), you could accumulate over $132,000 in just 15 years.

Lastly, spousal IRAs can help address the looming savings gap between men and women. According to recent U.S. Treasury data, women tend to hold fewer retirement assets (on average) than men.

Other spousal IRA rules to consider

There are no age restrictions attached to opening/funding a spousal IRA nor rules requiring equal contribution amounts (e.g., you can contribute $6,500 to your own IRA and $3,000 to a spousal IRA over the course of the year). A spousal IRA also doesn’t necessarily call for a brand-new account; a non-working spouse can use an existing account he/she previously opened for this purpose. Following a divorce or legal separation (in the absence of remarrying), however, one can no longer deduct contributions to a spouse’s IRA.

How to open a spousal IRA

You can open a spousal IRA at nearly any bank, credit union, or financial institution, with it likely structured as an IRA certificate of deposit (CD): an option suitable for individuals looking to minimize risk and secure a guaranteed return. You can also establish a spousal IRA through your financial advisor or an online brokerage, a route that allows you to choose your investments—potentially leading to higher returns albeit with increased risk.

In sum: what you need to know about spousal IRAs

Spousal IRAs are often an excellent retirement-savings option for couples, especially since enjoying your later years certainly won’t come cheap. With Fidelity reporting that a 65-year-old individual may need $165,000 in after-tax savings to cover healthcare expenses, it’s easy to see why every dollar counts!

Have a question about spousal IRAs? Don’t hesitate to schedule a FREE discovery call with one of our CFP® professionals so we can help you out.

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Vision Retirement is an independent registered advisor (RIA) firm headquartered in Ridgewood, New Jersey. Launched in 2006 to better help people prepare for retirement and feel more confident in their decision-making, our firm’s mission is to provide clients with clarity and guidance so they can enjoy a comfortable and stress-free retirement. To schedule a no-obligation consultation with one of our financial advisors, please click here.

Disclosures:
This document is a summary only and is not intended to provide specific advice or recommendations for any individual or business.