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Spousal IRAs: A way to pair up on saving

Here's an IRA that can help give your spouse equal footing when it comes to investing for retirement.

What is a spousal IRA?

Typically you need earned income to contribute to an IRA, but a spousal IRA relaxes that requirement and gives a husband or wife with low or no annual wages a way to save tax-efficiently for the future too.

What it isn't

It's not a different IRA type but simply a Roth or traditional IRA that lets a nonworking spouse have access to the tax favors and benefits that IRAs offer.

If your spouse is earning low or no annual wages, your spouse may be able to open a spousal IRA to save tax-efficiently for retirement. It's not a joint account, but rather a separate IRA set up in your spouse's name. You must be married and filing a joint tax return in order to open a spousal IRA.

Advantages of a spousal IRA

A spousal IRA provides a way to boost your retirement savings as a couple. Plus the spouse gets access to the same wide variety of investment choices, ranging from mutual funds and exchange-traded funds (ETFs) to individual stocks and bonds.

And while the maximum annual contribution limit of $6,000 ($7,000 for investors age 50 or older) may not seem like much, contributing this amount each year could make a real difference in a couple's retirement savings over time.

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