The Taxpayer Relief Act of 1997 created a new type of individual retirement account (IRA) called the Roth IRA. This new account allowed after-tax contributions and tax-free qualified distribution, but kept the annual contribution limits of the traditional IRAs. If your spouse does not have the funds to contribute to a Roth IRA, you may be able to make a contribute to your spouse's account.
Spousal IRA Contribution
To contribute to your spouse's Roth IRA, you must have compensation for the year equal to or greater than the sum of the two contributions, and you must file a joint tax return. For example, if you want to contribute $5,000 to your Roth IRA and $5,000 to your spouse's Roth IRA, you would need to have at least $10,000 for the year in compensation. This rule especially benefits couples that have one spouse working while the other stays at home because the stay-at-home spouse would not have compensation with which to qualify to make a contribution.
General Roth IRA Eligibility
As with any Roth IRA contribution, you must still meet the general Roth IRA eligibility requirements of having your modified adjusted gross income, or MAGI, fall below the annual limits. If you file jointly, you can make a full contribution in 2011 if your MAGI falls below $167,000 and a reduced contribution if your MAGI falls between $167,000 and $177,000. If you fall in the phaseout range, the closer your MAGI to the upper limit, the smaller you contribution limit.
Making a contribution to both your Roth IRA and the Roth IRA of your spouse allows you to effectively double your annual contribution limit. As of 2011, the maximum Roth IRA contribution is only $5,000 per person. If you are 50 or older, you can make an additional catch-up contribution for a total of $6,000. Especially if you cannot put money in an employer retirement plan, you want to set aside more than just your annual limit.
Even though you can make a contribution to a Roth IRA on behalf of your spouse if you meet the qualifications, you must still keep your Roth IRA separate from the Roth IRA of your spouse. Each IRA is linked to your Social Security number, so each person has their own account. Though you can list your spouse as your beneficiary and your spouse can list you, not even marriage is strong enough to join two Roth IRAs together.
- Creatas/Creatas/Getty Images