Can I Contribute to My Wife's Traditional IRA?
If you have a well-paying job that allows your wife to remain at home with the children, you may want to put money into a traditional IRA on her behalf as well. However, without a special exception, your wife could not put money in her traditional IRA because she would not have any compensation for the year. Understanding how the exception works can save you money on your taxes and increase your tax-advantaged retirement savings.
Other People Are Reading
-
Need Extra Compensation
-
You can only make a contribution to your wife's traditional IRA if your compensation is equal to or greater than the total of your IRA contribution and your wife's IRA contribution. For example, if the annual contribution limit for both you and your wife equals $5,000, you would need at least $10,000 in compensation for the year to make a full traditional IRA contribution to both your traditional IRA and your wife's traditional IRA.
Must File Joint Return
-
To use your income to qualify to contribute money to your wife's traditional IRA, you must file a joint income tax return. When you file a joint return, you do not have to specify which spouse earned the income so that IRS allows both spouses to make traditional IRA contributions even if the compensation only comes from one spouse.
-
Deductibility Questions
-
If you are covered by a retirement plan at work, your wife may not be able to deduct the contribution you make on her behalf if your modified adjusted gross income (MAGI) is too high. The MAGI limit differs depending on whether your wife has a plan or not. In 2011, if she does and you file jointly, you cannot deduct any of the contribution if your MAGI exceeds $110,000. If only you have an employer plan, you cannot take any deduction if your MAGI exceeds $179,000.
Advantages
-
The advantage of making a spousal IRA contribution is that you can save twice as much for your family's retirement. If the IRS did not allow you to use your compensation for your wife's traditional IRA contribution, if your wife did not have a paying job, but rather worked as a stay-at-home mom, she would not be able to put aside any money for retirement. With a spousal IRA contribution, you can also potentially double the tax deduction because you can put twice as much per year into traditional IRAs.
-
