You need to earn income to qualify to open
an IRA. But there’s an exception for nonworking
spouses. If your husband or wife doesn’t work
and you do, you can open a separate account for your
partner, called a spousal
IRA.
The 2008 contribution limits are the same as for
traditional
and
Roth
IRAs
— you can contribute up to $5,000 to your account
and $5,000 to your spouse’s account. Catch-up contributions also apply.
So if your spouse is over 50, you can put in an extra
$1,000. The spousal IRA limit will be indexed to rise for inflation in set increments starting in 2009.
You must file a joint tax return any year either
of you puts money in a spousal IRA.
Your family income will determine if you
can select a Roth IRA or a traditional IRA for your spousal account.
And your income and eligibility for a retirement plan at work
determine whether you can deduct the contribution to a traditional
IRA on your tax return.
Even though you make the contributions to
a spousal IRA, the account is in your partner’s name. He
or she can choose how to invest the money and can start withdrawing
from the account at age 59 1/2 without penalty. The same withdrawal
rules apply as to any other IRA.
