Wish you had access to the benefits of an IRA, but that earned income thing is setting you back?
Not to worry, you may be able to use a spousal IRA.
Here are the details on a spousal IRA.
Short version: it is a traditional or ROTH IRA, but instead of using your income to meet the contribution requirements you use your spouses income.
Originally with an IRA you had to have earned income in order to contribute. Realizing that was not fair to stay at home parents, a rule was put in place that if you are married and filing a joint return you can use your spouses earned income to qualify for contributing to an IRA. Which is now referred to as the Spousal IRA.
Thus if a mom or dad decides to stay at home, if their spouse makes over the contribution limits for two people– you can contribute for both spouses.
Now here is where it gets exciting for new business owners – the rule actually says that the spouse that earns the lesser amount is the one who can use their spouse’s income.
So let’s say your husband has a regular job and you just started a business. For the year he made $50,000 and you made $2,000. For the year 2013 and 2014 you both could contribute to your own IRA’s because he made over $11,000 (the contribution limit is $5,500 per person for those years).
Remember to check with a CPA or tax advisor for more specific information on your eligibility for contributing and deducting. The tax laws don’t always make it easy to understand so use a trained professional if you are confused! (I do!)
Now it is action time: If you are not saving for retirement because you don’t have a 401K, but you or your spouse have earned income – set up an IRA account today and get to saving for your future!