Spousal IRAs

Spousal IRAs

Even if you did not have taxable compensation, an IRA contribution may still be possible if your spouse had taxable income for the year of the contribution.

To participate in the Spousal IRA option, you must file a joint tax return – the amount of your combined contributions can’t be more than the taxable compensation you report on your joint tax return.

The IRA contribution limit for 2019 is $6,000 ($7,000 if age 50 or older). If you file a joint return for 2019 and you don’t have any taxable income, but your spouse does, according to the IRS, the most that may be contributed to a spousal IRA on your behalf is the lesser of:

  1. $6,000 ($7,000 if you are age 50 or older) or
  2. The total compensation includible in the gross income of both you and your spouse for the year, reduced by the following two amounts.
    a. Your spouse’s IRA contribution for the year to a traditional IRA.
    b. Any contributions for the year to a Roth IRA on behalf of your spouse.

If both you and your spouse are age 50 or older using this hypothetical above, that’s equal to a potential combined maximum of $14,000 in IRA contributions for that tax year.

Source: IRS Publication 590-A

 

More Updates

IMPORTANT TRUST DEADLINE APPROACHING

For trusts that inherited an IRA in 2019, an important deadline is approaching. The due date to provide required trust documentation to the IRA custodian to ensure that the longest payout period possible is available for the inherited IRA is October 31, 2020. Generally, only individuals who are named on an IRA beneficiary form can

Read More »
admin October 27, 2020

CRDS AND ROTH CONVERSIONS – ABUSE OF THE RULES?

The coronavirus-related distribution (CRD) rules for Roth conversions have a gaping hole. An “affected person” (as we have defined in previous blogs), is entitled under the CARES Act to withdraw up to $100,000 from their IRA or workplace retirement plan. A CRD avoids the 10% early distribution penalty for those under 59 1/2, can be

Read More »
admin May 20, 2020

Rolling Over an RMD

Like most people’s lives, the retirement world is upside down. This is made evident by a single statement: “Required minimum distributions (RMDs) can be rolled over.” Yes, that is the new normal—at least for this year. RMDs are considered the first money out of an IRA and workplace plan. Typically, these dollars are ineligible to

Read More »
admin April 22, 2020
Scroll to Top