Retirement Planning - Getting A Grasp of the Spousal IRA
The Individual Retirement Account has been a huge hit with people trying to save money for their golden years to supplement their social security benefits...assuming there are any! While most people have a passing familiarity with the IRA as well as the Roth IRA, fewer seem to be intimately familiar with the spousal IRA.
What is the spousal IRA? It is a method for getting around an annoying tax law issue for a couple where only one of the spouses work. The problem is that you must have a certain level of earned income before you can open an IRA. The level is low, but non-working spouses usually can't show enough income and end up being prohibited from opening an IRA.
So, how does the spouse IRA work? It is incredibly simple. The non-working spouse simply pools their income with the working spouse for financial appearances. That sounds a bit fishy, but it is entirely legal. So long as the combined income figures for both spouses exceed $10,000 annually, then both spouses can open an IRA. You can even open a Roth IRA if you so wish. It is my personal preference.
The spouse IRA may seem like a fairly innocuous retirement device, but that is really the wrong way to look at it. The cost of living is spiraling upwards and you can expect it to continue to do so. The value of the dollar does not look all that strong in the long run given the state of our national debt and additional unfunded liabilities. Stuffing as much money as you can into tax deferred retirement vehicles just makes sense. The ability to cram an additional $5,000 into a spousal IRA just adds more money to your retirement efforts, money you will be glad you set aside when the golden years roll around.
What is the spousal IRA? It is a method for getting around an annoying tax law issue for a couple where only one of the spouses work. The problem is that you must have a certain level of earned income before you can open an IRA. The level is low, but non-working spouses usually can't show enough income and end up being prohibited from opening an IRA.
So, how does the spouse IRA work? It is incredibly simple. The non-working spouse simply pools their income with the working spouse for financial appearances. That sounds a bit fishy, but it is entirely legal. So long as the combined income figures for both spouses exceed $10,000 annually, then both spouses can open an IRA. You can even open a Roth IRA if you so wish. It is my personal preference.
The spouse IRA may seem like a fairly innocuous retirement device, but that is really the wrong way to look at it. The cost of living is spiraling upwards and you can expect it to continue to do so. The value of the dollar does not look all that strong in the long run given the state of our national debt and additional unfunded liabilities. Stuffing as much money as you can into tax deferred retirement vehicles just makes sense. The ability to cram an additional $5,000 into a spousal IRA just adds more money to your retirement efforts, money you will be glad you set aside when the golden years roll around.