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What options are available for a non-working spouse as far as retirement accounts/contributions go?

I'd imagine that there are no pre-tax options, since the non-working spouse has no direct income.

Assuming there are options, are they limited based on the overall household income?

  • A Solo 401(k) allows for a spouse as employee - is there anything your wife can do for you? – JTP - Apologise to Monica Sep 26 '13 at 19:08
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Spousal Contribution to an IRA

In the United States, spousal contributions can be made to a traditional IRA if either party has income.

In 2013, each person can contribute $5,500/year (or $11,000/year as a couple) to a qualified traditional IRA. Additionally, if you (and/or your spouse) are over 50, you can make what are called "catch-up contributions" (an extra $1,000 per person per year for each individual over 50).

As such, if either member of the combined couple is eligible, contributions on behalf of the non-working spouse can be made using marital income. If one party is excluded, the other party may still eligible.

In some cases, there may be a maximum amount of income that you can earn and still be eligible. If the couple has taxable income that does not exceed the phaseout threshold ($178,000/year in 2013), that couple can contribute to a traditional IRA.

If the couple's income exceeds the threshold, then it is still possible to make contributions, but they will not be deductible. As such, converting the balance to a Roth makes sense. As always, consult your account to ensure that your situation applies.

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    (Side note) The increased limits for older individuals applies as well. If you're age 50 or older, the limit is $6,500 for your contributions, and if both you and your spouse are over 50, the increased limit applies to both. – John Bensin Sep 26 '13 at 13:25
  • Thanks. So if I exceed that taxable income level, my wife can't make contributions to an IRA? If I'm not mistaken, I can still do a SEP (I'm self-employed). So I can make contributions, but my wife can't? Hopefully that doesn't change the whole basis of the question . . . – Phil Sandler Sep 26 '13 at 13:27
  • @AffableGeek To be clear, if your spouse isn't over 50, his/her contributions are still limited to $5,500. Even though one person is making the contributions, the age limit is still applied to both. – John Bensin Sep 26 '13 at 13:28
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    I believe you can still make the contribution, you just can't deduct it. At that point, however, you'd probably be better off making a Roth contribution. – Affable Geek Sep 26 '13 at 13:28
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    @AffableGeek Direct Roth contributions are also limited by the AGI. But you can always make a non-deductible contribution and then convert to Roth. Keep in mind that if you have part of IRA that was deducted and part that was not,the conversion will be prorated and some tax will be due. – littleadv Sep 26 '13 at 16:53

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