Spousal Roth IRA

If you feel your Roth IRA contribution limit is insufficient, you may consider opening a spousal Roth IRA to save more.

Generally, the rules of the Roth IRA for the nonworking spouse are almost same as a regular Roth IRA rules. You just need to know some special rules for the spousal Roth IRA.

Eligibility

To be eligible, you must choose married filing jointly as your filing status and you must have earned income for the tax year of the contribution. There are no age limits for Roth contributions, as long as one spouse earns income.

Income Limit

For Roth contribution, your modified adjusted gross income (MAGI) should be less than certain income limit especially applied to a Roth IRA. Because you must file a joint return to contribute for your nonworking spouse, your MAGI should be $167,000 or less to make a full contribution for tax year 2010. If your MAGI between $167,000 and $177,000, your contribution limit will be phased out to zero.

Contribution Limit

For tax year 2010, your spouse can make a contribution to a Roth IRA of up to $5,000 annually ($6,000 if age 50 or older). That means that you may contribute as much as $10,000 ($12,000 if both you and your spouse are age 50 or older). However, you should keep in mind that you cannot contribute more than your earned income amount. Therefore, if you want to make a full contribution for both you and your spouse, you must earn more than total combined contribution limit.

Management

Even though you and your spouse file jointly and open Roth IRAs based on combined income, your Roth accounts will be managed separately. So each spouse has their own account.