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Married/Getting Married - What You Need to Know About Spousal IRAs

Updated: Feb 15, 2021

Spousal IRA's can be a great savings tool that many investing families are not aware of - particularly when planning with high net worth couples where the primary wage earning spouse can't make tax-deductible IRA contributions or Roth IRA contributions due to income limits and may already have tax-deferred IRA dollars. This scenario complicates any Roth conversion and brings the Pro-rata rule into play; making it impossible to convert just the non-deductible IRA money (after tax dollars) - causing a taxable event because a pro-rata % of the tax-deferred IRA money must also be converted. This is where a Spousal IRA for a spouse with no tax-deducible (deferred) IRA funds could possibly be an option for consideration. See this article for more information by Nerd Wallet.

Getting Married? Already Married? "..spousal IRAs help protect the non-working spouse in the case their happily ever after doesn’t end quite so happily...".

As a CFP, Certified Financial planner, focusing on divorce I always look at savings & planning through this lens as well.

“Let’s face it, with 50% or more of first marriages ending in divorce, spousal IRAs are a great way to level the playing field by having retirement assets in the name of the spouse that does not have access to a retirement plan if a couple ever find themselves in a divorce situation,”

Even if you are lucky enough to have that happily ever after - a spousal IRA is a great way to build family wealth, and there's still time in 2020 before the Tax deadline of July 15, or typically April 15th of every calendar year for the previous tax year filing.

For more information read this great article by Magnify Money that goes into greater detail about Spousal IRA's "Everything You Need to Know About Spousal IRA".

This content was developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice, and may not be used for the purpose of avoiding any federal tax penalties. Always consult legal or tax professionals for specific information regarding your individual situation/circumstances. Additionally, the opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security or service.


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