The concept of a spousal IRA, a separate Roth or traditional IRA for a non-working spouse, is often overlooked but can be a valuable tool for married couples looking to boost retirement savings. Certified financial planners like Judy Brown emphasize the benefits of utilizing spousal IRAs, especially for single-income households where one spouse doesn’t have earned income. These accounts can provide a current-year tax break and enhance retirement savings for nonearning spouses, with contributions being possible until the federal tax deadline in April.
Traditional pretax spousal IRA contributions offer a 2023 tax break, depending on income and workplace retirement plan participation. Financial planners like Catherine Valega advise nonearning spouses to prioritize making contributions to a spousal IRA to ensure long-term financial security. The annual IRA contribution limit is $6,500 for 2023, increasing to $7,000 for 2024, with an additional $1,000 allowed for savers aged 50 and older. Despite income phaseouts for deductibility, even small contributions to spousal IRAs can provide meaningful tax savings for couples.
While spousal IRA contributions make financial sense for many couples, it is essential to consider other factors before depositing funds, such as short-term financial goals or potential tax implications in the future. Laura Mattia, CEO of Atlas Fiduciary Financial, highlights the importance of balancing retirement savings with present needs and future tax obligations. Planning for retirement involves a complex puzzle of financial considerations that vary for each couple, requiring thoughtful analysis and guidance from financial professionals.
