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One Job, Two Roths

As long as you meet the guidelines, a non-working spouse can have a Roth, too

Note: The article below refers to the 2012 tax year. Assuming your IRA was opened by Dec. 31, 2012, you have until the tax filing deadline–April 15, 2013–to make a 2012 contribution. The income/contribution limits have increased for the 2013 tax year. Click here for the details.

Despite the steady rise in families with two working spouses, more than 3 out of every 10 American families have a single breadwinner. So what happens to the spouse who’s home taking care of the kids or doesn’t work by choice or because of a disability?

They open a “spousal” IRA. In truth, there’s technically no such thing as a spousal IRA; it’s just a set of rules that allow non-working spouse to contribute to their own retirement.

First, you must file a joint return and, in 2012, your MAGI needs to be less than $179,000. In most cases, the spouse can then contribute up to the annual limit (in 2012, $5,000; $6,000 if over age 50).

The only wrinkle comes if the working spouse doesn’t have much income. Then, the spousal contribution is limited to that income minus any Roth IRA contributions made on behalf of the working spouse. In other words, if the working spouse makes $8,000 and contributes $5,000 to an IRA, the non-working spouse can only contribute $3,000 ($8,000-$5,000).

Once you determine your eligibility, the process of opening and managing a Roth IRA is the same as for any account holder.

Thinking About Opening an IRA?

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Important Roth Information

Each year, the IRS updates the rules for Roth IRA. Here are all the details for 2013 & 2014: