The spousal IRA: saving for retirement on one income.
If one spouse earns and the other doesn't, the household can still fund two IRAs. The non-working spouse's account is funded from the working spouse's earned income — and it's their account, in their name, with the same tax treatment as any other IRA.
The spousal IRA isn't a special type of account. It's the everyday traditional or Roth IRA with one rule modification: the non-working spouse can contribute based on the working spouse's earned income, even though the non-working spouse has no income of their own. For households that lose one income to caregiving, education, or a career break, this provision keeps both spouses building retirement assets in their own names.
The eligibility rules
The couple must file a joint federal tax return. The working spouse must have earned income at least equal to the total of both IRA contributions ($14,000 if both contribute the max, plus catch-up amounts if 50+). The non-working spouse's IRA is contributed to and titled in their name, not the working spouse's. If both spouses had income previously, prior 401(k) and IRA balances stay with whoever earned them; the spousal contribution is going-forward only.
Why this matters more than people realize
Doubling the household's tax-advantaged retirement savings each year compounds dramatically. Twenty years of an additional $7,000/year ($8,000 if 50+) at a 7% return is roughly $300,000 in additional retirement assets — held in the non-working spouse's name. For a couple where one stops working at 45 and the other works to 65, that's twenty years of compounding that would otherwise be lost.
Traditional or Roth?
The same considerations apply as for any IRA. If the working spouse is in a high bracket and the family expects to be in a lower bracket in retirement, traditional (deductible) makes sense. If the family is in a moderate bracket now and the non-working spouse is building toward future Roth withdrawals, Roth makes sense. Note: deductibility of a traditional IRA contribution phases out when the working spouse is covered by a workplace plan (401(k), etc.) and household income is above certain thresholds. Run the income limits before assuming the deduction.
Coordinating with the working-spouse's 401(k)
For most households, the priority order is: (1) capture any employer 401(k) match (free money), (2) max the working spouse's HSA if eligible, (3) max the non-working spouse's IRA (Roth or traditional depending on the math), (4) max the working spouse's 401(k) above the match, (5) max the working spouse's IRA. The non-working spouse's IRA usually comes before maxing the working spouse's 401(k) once the match is captured — diversifies the household's account ownership and tax treatment.
Estate and divorce considerations
The non-working spouse's IRA is their separate property in their name. In a divorce, in community property states like Texas, IRAs accumulated during the marriage are generally community property regardless of which name they're in. But the account itself stays with the named spouse for ongoing investment authority and beneficiary designation purposes. Make sure beneficiary forms are current at both custodians.
After 73 — the RMD timing
The non-working spouse's IRA has its own RMD calendar based on their age. If the non-working spouse is younger than the working spouse, their RMDs start later — useful for tax-bracket management in the gap years between the first and second RMDs in a household. Roth conversions in the non-working spouse's account follow the same gap-year logic but on the non-working spouse's age timeline.
A household that uses spousal IRAs consistently over a working career often ends retirement with materially more balanced his/hers retirement assets — which simplifies almost every downstream planning decision.