Info about Retirement
What Is Spousal IRA And How Does It Work?
You may be wondering what the term spousal IRA means. If you have no income of your own, or are earning below the qualifying income bracket, you are eligible for these kinds of contributions on your IRA or Roth IRA.
If you take a closer look at it, the term is used to describe a rule allowing you to use your spouse’s income to make your contributions, particularly if you are home-based or have taken some unavoidable time off from your job.
The most basic rule governing IRA contributions is that they can’t exceed the amount you make as qualifying income for the whole year. However, you can always use these kind of contributions if you file a joint income tax return with your spouse who does possess the qualifying income, and you need not have to have an income of your own to make contributions to your Roth IRA.
Many people find this kind of IRA contributions rule very simple. If you or your spouse both have jobs, and earns more than two times the amount of your IRA contribution threshold, then you are both eligible for the maximum IRA contributions.
Who actually makes the contributions doesn’t matter. The contributions can come from your spouse with a qualified income, or even yourself out of monies derived from other sources, such as cash gifts or sale of property, for instance.
If you have your own qualifying income, however, you will then be able to make your own contributions from that income into your IRA. The special rules on spousal IRA do not apply at this point. Spousal IRA simply means that you will be making use of the qualifying income of your spouse to make your contributions, which otherwise would not have been possible with the amount of money that you earn on your own.