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The Spousal IRA

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420x316-grad-lee Dee Lee
Dee Lee is a Certified Financial Planner who received a diploma in...
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BOSTON (CBS) – A Spousal IRA is an IRA funded for a spouse with little or no income by a working spouse with income. Their combined income must be at least equal to the amount contributed and they must file a joint tax return for the year the IRA is set up.

The Spousal IRA

147631174 The Spousal IRA
WBZ NewsRadio 1030

The IRA belongs to the nonworking spouse and they can name a beneficiary and choose the investments.

For example, one parent is at home with the twins and he only works part-time and earns $3,000. The other spouse earns $95,000. The “at home spouse” can set up an IRA for the maximum of $5,500 using their joint income.

There are a few more rules. Participants must be younger than 70½. If you make too much money the government will not allow you to use a Spousal IRA. Eligibility is phased out once joint AGI (adjusted gross income) is over $181,000 and goes away once you reach $191,000.

You can set up a traditional IRA or you can use a Roth IRA. There are many good calculators online to help you figure out whether a current deduction or tax-free future income is the better deal. The younger you are the sweeter the deal for tax-free income.

Many couples are making some tough decisions about having one parent staying at home when their kids are little. Fifteen or so years out of the job market puts a big hole in their retirement planning.

If you use a Spousal IRA for 15 years and contributed on average $3,000 a year you would have contributed $45,000 to the spousal IRA. Now if we assume an 8% return once you reach age 65 you could have over $400,000 in your nest egg.

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On Saturday May 17th Dee will be the keynote speaker at The Money Conference which is a FREE one-day event presented by The Office of Massachusetts State Treasury and the Massachusetts Financial Literacy Trust Fund, in conjunction with local cities and community partners to help households build their financial knowledge and improve their financial behavior through quality financial education.

The Money Conference: Financial Empowerment for Individuals & Families

Saturday May 17, 2014
8:30 am – 3:00 pm

Everett High School
100 Elm Street
Everett, MA 02149

Questions? Contact Sheila O’Loughlin at (617) 367-6900.

Do you feel your need for financial education and empowerment is urgent? You are not alone! Americans are saving less, spending more and carrying credit card debt over from month-to-month, suggesting that the painful financial lessons of the recent past may quickly be forgotten.

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