Another Way To Save: Spousal IRAs

Retirement is Paramount

While dual-income households are now common in the United States, this was not always the case. Families traditionally relied on a single man as the primary earner, while women were homemakers. But, those days are gone, and the definition of the American family has evolved with progressive changes and different social expectations. We now see a rise in single-income households, which include arrangements like partially retired couples or stay-at-home dads.

However, despite the diversity in households, one constant has remained and that is the need for retirement income. With pensions declining, this responsibility has shifted largely to families, and for single-income households, there are fewer tax-advantaged savings options, as only one spouse can contribute to a 401(k). So, how else can a single-income family save in a tax-advantaged way?

Enter The Spousal IRA

To contribute to a qualified retirement account, one typically needs to have earned income. However, the IRS permits a non-working spouse to contribute to a Spousal IRA as long as their partner has earned income for the year.

Importantly, if the non-working spouse already have an existing IRA, you may be able to utilize that account for contributions.

The Rules

A spousal IRA operates like an ordinary IRA, allowing someone to open either a traditional or Roth IRA as long as their spouse has earned income. Just like regular IRAs, income limits affect the deductibility of traditional contributions and Roth eligibility. Further, the couple must file their taxes jointly.

In 2025, if the earning spouse makes over $236,000, Roth spousal contributions are restricted. However, if the earning spouse does not have a 401(k) plan offered through their employer, the non-earning spouse can make a fully deductible traditional IRA contribution to their spousal IRA.

Notably, spousal IRAs have the same contribution limits as standard IRAs: $7,000 plus a $1,000 catch-up contribution for those 50 and older for 2025. However, if the household contributes $16,000 to IRAs in 2025, the household must have earned at least $14,000 in ordinary income, as contributions cannot exceed household earnings.

Closing Thoughts

The Spousal IRA is a little-known option for single-income households that provides unique benefits to help you reach your family's retirement goals. While saving for retirement can be more challenging with only one income, your account options are not limited to just IRAs.

If your household needs help figuring out what steps come next financially, Lundeen Abrams Advisors is here to help. We regularly work with households to determine the best course of action and help them create a plan to achieve their financial aspirations. Please reach out to us today to schedule a consultation because we are here to help.