Maximize Your Marriage Benefits: A Comprehensive Guide to Spousal IRAs

For many married couples approaching retirement, balancing retirement accounts for both spouses can pose some challenges—especially if one partner has spent years outside the workforce or earning significantly less income. In these situations, the Spousal IRA can be an underappreciated but powerful tool to boost household retirement readiness. This guide explores how Spousal IRAs work, highlights the rules that govern them, and shows how they can integrate smoothly with federal benefits like the Thrift Savings Plan (TSP). We will also examine ways to consider these accounts to provide both spouses with the confidence and stability they need as they transition into retirement.

At our firm, we’ve spent over three decades specializing in retirement guidance for federal and military employees. With credentials such as the Chartered Federal Employee Benefits Consultant℠ (ChFEBC), CERTIFIED FINANCIAL PLANNER™ (CFP®), and Accredited Investment Fiduciary® (AIF®), we’ve developed a unique Fed-Expert Financial Blueprint that helps federal employees—including their spouses—make the most of every available benefit and provision. Spousal IRAs are an essential piece of that blueprint.

What Is a Spousal IRA?

A Spousal IRA isn’t a distinct type of IRA. Rather, it’s an IRS rule that permits a working spouse to make an IRA contribution on behalf of a spouse who has little or no earned income. This benefit stems from legislation initially championed by Senator Kay Bailey Hutchison, which effectively allows couples to save more toward retirement, even if one partner is not actively earning wages.

Though the phrase “Spousal IRA” sounds like a specialty product, it follows the same rules that govern Traditional IRAs or Roth IRAs. You can open a Spousal IRA at a bank, brokerage, or other financial institution, choosing investments that align with your overall objectives. Federal employees can find this particularly helpful if they want to top up their spouse’s retirement savings in addition to the federal Thrift Savings Plan (TSP). Military families, who frequently face periods with one spouse out of the workforce, can also benefit significantly.

Now, let’s explore how a non-working or lower-earning spouse might build a nest egg. Imagine a long-time federal employee covered under the Federal Employees Retirement System (FERS). This employee consistently contributes to their TSP, but the spouse stays home to manage finances and family obligations. Thanks to Spousal IRA rules, each year the working spouse can make a contribution to an IRA in the non-working spouse’s name—expanding the couple’s total investable retirement assets in useful ways.

Spousal IRA Basics

The Spousal IRA concept rests on a few simple requirements. First, the couple must be married and file a joint tax return. Second, the working spouse must have enough earned income to cover contributions for both spouses. If you’re a federal or military employee with wages well above the annual limit, you can often contribute the maximum permitted across both spouses’ IRAs. These specific “Spousal IRA rules” enable more equitable retirement savings, so that each spouse potentially heads into retirement with their own separate account.

This leads to an important clarification: Your spouse must have his or her own IRA. You cannot jointly own an IRA. However, you as the working spouse can contribute on your spouse’s behalf, as if the spouse had significant earned income. This approach strengthens household readiness, ensuring that any spouse who has been out of the workforce for part of their working years still secures a comfortable retirement foundation.

Contribution Limits and Tax Advantages

One of the best-known benefits of a Spousal IRA is the chance to contribute up to the same annual limit enjoyed by a working individual. This is often referred to as the “Spousal IRA contribution limit.” In 2025, individuals under age 50 can contribute up to $7,000, while those age 50 or older get an additional $1,000 catch-up, bringing their total annual IRA contribution limit to $8,000. These figures match the Traditional and Roth IRA limits set by the IRS, and they apply equally to Spousal IRAs.

How do the tax benefits of a Spousal IRA work? If you opt for a Traditional Spousal IRA, you might get a tax deduction for your contributions, depending on your household’s modified adjusted gross income (MAGI). Alternatively, a Roth Spousal IRA uses after-tax dollars, but can grow tax-free and won’t be subject to required minimum distributions (RMDs). Couples often find that Traditional IRAs can reduce their immediate tax bill, while Roth IRAs may offer more future flexibility. This means there’s a strategic element in deciding between the two. If you’re near retirement, you might favor the Traditional IRA’s immediate deduction. If you have a bit more time to allow the money to grow, a Roth can be beneficial.

Annual Contribution Limits at a Glance

Below is a quick overview of the Spousal IRA contribution limits for 2024 and 2025. Keep in mind that these amounts are subject to inflation and occasional adjustment, so it’s advisable to confirm the most current figures each tax season.

This setup allows couples—especially federal or military families—to double up on their household’s IRA contributions each year if they wish. While the working spouse might be investing in a 401(k), 403(b), TSP, or similar plan, the couple also has the opportunity for additional tax-deferred or tax-free growth via the Spousal IRA.

Traditional vs. Roth Spousal IRA

The question often arises: “Which is better—a Traditional or a Roth Spousal IRA?” This choice is personal and depends on multiple factors, including current tax bracket, projected tax bracket in retirement, and personal preferences about required minimum distributions. A Traditional IRA might yield an upfront tax deduction, but you’ll pay taxes on withdrawals later and face RMDs at age 73. A Roth IRA, on the other hand, has no up-front deduction, but earnings grow tax-free and your withdrawals (if taken under qualified rules) can be tax-free as well. This can lead to significant savings over many years.

Let’s look at the spousal IRA tax benefits in more concrete terms, assuming you’re within certain income thresholds to either deduct Traditional IRA contributions or be eligible for Roth IRA contributions. If you’re uncertain which route to take, a financial planner well-versed in federal benefits can help you choose based on your current and future tax considerations.

Deductibility and Income Thresholds for 2025

The IRS enforces income limits on whether you can deduct your Traditional IRA contributions (if you have a retirement plan at work) or even contribute to a Roth IRA. The table below reflects the 2025 thresholds for married couples filing jointly. If your household MAGI is above these thresholds, you may face partial or no deductibility.

Be sure to check updated guidance each year. If you fall above the Traditional IRA deductibility or Roth IRA contribution thresholds, there may still be alternative strategies, including non-deductible Traditional IRAs or “backdoor Roth” conversions. This is where expert financial advice is crucial to ensure proper planning and follow-through, especially for federal employees who already have a TSP or other specialized benefits.

Benefits of a Spousal IRA for Federal Employees

Whether you’re actively employed or retired, federal government employees have unique retirement provisions. The TSP often serves as the backbone of a federal worker’s retirement saving, but a Spousal IRA can play a critical supporting role. For instance, some couples use the Spousal IRA to accumulate extra tax deductions during peak earning years. Others prefer the Roth structure to store after-tax dollars that can grow tax-free alongside the TSP. Either way, layering another tax-advantaged account into your overall plan can be advantageous for a spouse’s retirement security.

FERS employees, in particular, count on a pension, TSP contributions, Social Security, and possibly other savings. If you’re a uniformed service member, you might already be familiar with the Blended Retirement System. By adding a Spousal IRA to the mix, you can diversify your asset base further, protect a non-working spouse, and manage your tax obligations more flexibly.

If you’d like more real-world context for how Spousal IRAs can fit into your broader plan, sign up for one of our free Federal Retirement Planning Workshops. You’ll gain a deeper understanding of how to coordinate your TSP, potential pension, and other elements with Spousal IRAs to achieve financial confidence.

Opening and Maintaining a Spousal IRA

From a practical standpoint, opening a Spousal IRA mirrors opening a standard IRA. You’ll choose a provider—typically, a bank, brokerage, or robo-advisor—and designate whether you’re establishing a Traditional or Roth account. The key difference is how you classify the contributions for tax purposes, since one spouse lacks earned income. You’ll need to keep track of the relevant paperwork to document your contributions, especially if you’re claiming a tax deduction.

To open an account, you’ll generally provide basic personal information (name, address, Social Security number) and then fund the new IRA. You’ll then select the types of investments that align with your goals, risk tolerance, and time horizon. If you’re a new investor, it can be helpful to start with broad-based, low-cost index funds or target-date retirement funds. More experienced investors might explore individual stocks, bonds, or specialized funds for diversification.

Strategies to Maximize Spousal IRA Benefits

Making full contributions each year is usually the top recommendation—you may not always be able to go back and “catch up” if you miss a year, aside from the age-based catch-up amount. Consider starting early, even if you or your spouse doesn’t plan to retire for another decade or more. The power of compounding can be remarkable, especially when multiplied by annual contributions and potential market growth.

Couples sometimes split contributions between Traditional and Roth accounts to have both immediate tax reductions (from Traditional) and future tax advantages (from Roth). Or if you’re uncertain about tax brackets in retirement, this “split the difference” approach provides balanced flexibility. With the right guidance, you can coordinate your contributions with your TSP (if you’re a federal employee) and any other retirement accounts you hold.

Some families also adjust contributions over time based on changes in income. If your spouse starts earning income again, Spousal IRA rules might still be viable as long as you meet certain conditions, but you could also shift your overall strategy. The important thing is to review your approach annually, ensuring it continues to meet your financial goals.

Common Pitfalls and Considerations

One of the most common misunderstandings regarding Spousal IRAs is ownership. Each IRA remains tied to its individual owner. You can only change beneficiaries on the account, but you can’t hold it jointly or later merge it into your own. Additionally, just like any other IRA, withdrawals before age 59½ generally incur a 10% early-withdrawal penalty, on top of ordinary income tax (if it’s a Traditional IRA). Planning for distributions is important so you don’t inadvertently trigger extra taxes.

An interesting wrinkle for federal and military families is how changes in insurance coverage or work status might affect your finances. If your spouse decides to re-enter the workforce, for instance, the rules that determine Spousal IRA contributions could shift. You’ll want to confirm how that extra income might influence your joint taxation or overall retirement strategy. Laws and IRS thresholds can change periodically, so it’s worthwhile to stay updated.

Integrating Spousal IRAs with a Comprehensive Retirement Plan

We’ve found that Spousal IRAs gain their real strength when integrated into a bigger-picture retirement plan. That means looking at the interplay between the TSP, pensions like FERS or CSRS, potential Social Security benefits, and any other savings or investment vehicles you have. Ideally, the non-working spouse ends up with robust retirement assets of their own, giving both partners confidence and autonomy. This can also help in estate planning, ensuring that both spouses are well looked after.

A useful illustration might be two couples with identical incomes: One invests only in the working spouse’s TSP, while the other invests similarly in the TSP but also consistently contributes to the Spousal IRA for the non-working spouse. Over time, the second couple benefits from extra compounding. Their combined retirement resources grow substantially larger, and both spouses enjoy the security of individually owned retirement accounts.

Our firm’s Fed-Expert Financial Blueprint is designed to fit Spousal IRAs into a broader matrix of government benefits and strategic planning. Because each couple’s situation differs—whether that’s the size of your federal pension, if your spouse qualifies for TRICARE or FEHB, or other factors—customizing the blueprint is essential. We encourage you to consider professional planning if you’re on the fence or feeling overwhelmed by the many moving parts.

Conclusion & Next Steps

If you and your spouse have been exploring ways to strengthen your retirement security, the benefits of a Spousal IRA should certainly be near the top of your list. By allowing one spouse’s earned income to fund another’s IRA, it opens the door to substantial compounding, either through tax deductions or tax-free growth. Federal and military families can leverage these strategies to supplement TSP contributions or build additional savings for a non-working spouse who might not otherwise have adequate resources set aside.

After walking through the Spousal IRA rules, from spousal IRA contribution limits to spousal IRA tax benefits and everything in between, it’s clear that this provision can enrich a couple’s retirement journey. We invite you to gain a deeper understanding of all the retirement options available to you by attending one of our workshops. Sign up for one of our free Federal Retirement Planning Workshops to get information tailored to federal employees, and learn how to incorporate a Spousal IRA into your broader retirement strategy.

Building a comfortable retirement doesn’t have to be mysterious or stressful. With the right approach and professional guidance, both spouses can enter their later years with confidence, knowing they’ve utilized every possible avenue for long-term growth and financial security.