With tax season upon us, I thought I might take a moment to talk about an issue I’ve discussed in some recent radio shows: maximizing your IRA savings opportunities. One of the ways in which you can do that—and it’s a technique that many people are not aware of—is through spousal IRA contributions.
While you typically need income to contribute to an IRA, the spousal IRA exception works like this: if your spouse still works, he or she can contribute to an IRA on your behalf. There is an important caveat: together, you and your spouse cannot contribute more than your spouse earned in 2013. So in order to contribute the maximum ($5,500, or $6,500 for those over 50) to both accounts, your spouse must have earned at least $11,000 (or $13,000 if you are contributing the higher figure).
The same spousal contribution guidelines apply to Roth IRAs, but remember that there are a few differences between Roth IRA contributions and traditional IRA guidelines. Roth IRAs have no contribution age limit, while those over the age of 70 ½ cannot make traditional IRA contributions. And, as of 2013, your modified adjusted gross income must be less than $188,000 (when filing jointly) to qualify you to contribute to a Roth IRA. Remember that for 2013 IRA contributions, you have until April 15, 2014—so it’s not too late for you (or your spouse) to get caught up.