A spousal IRA is an individual retirement account funded for a spouse who earns little or no income, using the working spouse’s earnings to justify the contribution. The account is opened in the non-working spouse’s name alone and otherwise works like any other Traditional or Roth IRA. For 2026, a working spouse can contribute up to $7,500 to their partner’s IRA, or $8,600 if that partner is 50 or older.1Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 The formal name in the tax code is the Kay Bailey Hutchison Spousal IRA.
Who Qualifies
Three conditions must all be met. You must be legally married, you must file a joint federal tax return, and the working spouse must have enough earned income to cover both IRA contributions combined. Filing separately eliminates access to the spousal provision entirely.2Office of the Law Revision Counsel. 26 U.S. Code 219 – Retirement Savings
Earned income means wages, salaries, commissions, and net self-employment income. Pension payments, investment returns, rental income, and Social Security benefits don’t count. The lower-earning spouse doesn’t need to earn zero. If one spouse earns $5,000 and the other earns $80,000, the $5,000 earner is the one whose IRA gets funded under the spousal rules.3Internal Revenue Service. Publication 590-A: Contributions to Individual Retirement Arrangements
How Much You Can Contribute in 2026
The 2026 IRA contribution limit is $7,500 per person. A working spouse can fund their own IRA and the spousal IRA up to $7,500 each, for a combined $15,000.1Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
If either spouse is 50 or older, that person’s limit rises by $1,100, bringing their individual cap to $8,600. If both qualify for the catch-up, the couple can contribute up to $17,200 combined.1Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
One hard ceiling overrides the per-person limits: total contributions to both IRAs cannot exceed the working spouse’s earned income for the year. If the working spouse earns $12,000, the couple can put at most $12,000 across both accounts.4Internal Revenue Service. Retirement Topics – IRA Contribution Limits These dollar limits apply the same way whether the account is Traditional or Roth.
Traditional or Roth
Both account types grow tax-deferred. The difference is when you pay tax.
Traditional Spousal IRA
Contributions may be tax-deductible for the year you make them, and withdrawals in retirement are taxed as ordinary income. If neither spouse is covered by a workplace retirement plan, the Traditional contribution is fully deductible regardless of income.5Internal Revenue Service. IRA Deduction Limits
If the working spouse has a 401(k), pension, or similar plan at work, two separate phase-outs come into play, and the one covering the spousal IRA is noticeably more generous. Because the non-working spouse is not personally covered by a workplace plan, their deduction phases out between $242,000 and $252,000 in modified adjusted gross income for 2026.6Internal Revenue Service. Notice 2025-67: 2026 Amounts Relating to Retirement Plans and IRAs Below $242,000 the deduction is available in full; above $252,000 it disappears; in between it is partial.
The working spouse’s own IRA deduction faces a much lower phase-out when they are covered by a workplace plan: $129,000 to $149,000 for 2026.6Internal Revenue Service. Notice 2025-67: 2026 Amounts Relating to Retirement Plans and IRAs A couple earning $180,000 where the working spouse has a 401(k) loses the deduction on the working spouse’s own Traditional IRA but keeps the full deduction on the spousal IRA. Many couples assume both phase-outs are identical and skip the spousal contribution for that reason.
Roth Spousal IRA
Roth contributions are made with after-tax dollars and are never deductible. Qualified withdrawals in retirement, including earnings, are completely tax-free. A Roth also has no required minimum distributions during the owner’s lifetime, which matters for couples who want the money to keep growing or who are thinking about estate planning.
Roth eligibility is based on income rather than workplace plan coverage. For 2026, married couples filing jointly can make full Roth contributions below $242,000 of MAGI. Eligibility phases out between $242,000 and $252,000 and ends at $252,000.1Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
Opening and Funding the Account
The spousal IRA is opened in the non-working spouse’s name only. It is never a joint account, even though the working spouse provides the money. The non-working spouse is the sole owner and controls investment choices and withdrawals.
To open the account, the non-working spouse picks a brokerage, bank, or other IRA custodian and completes the application. The application asks whether the account should be Traditional or Roth, so decide that first. The working spouse then transfers funds to the custodian and designates the deposit as a contribution to the non-working spouse’s IRA for the relevant tax year.
Contributions for a given tax year can be made from January 1 of that year through the federal tax filing deadline, which is typically April 15 of the following year.7Internal Revenue Service. IRA Year-End Reminders That window lets couples finalize their income numbers before deciding how much to contribute.
Withdrawals, Penalties, and RMDs
Pulling money from a spousal IRA before age 59½ triggers a 10% early withdrawal penalty on top of any income tax owed.8Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions Several exceptions waive the penalty, including permanent disability, qualified first-time home purchases up to $10,000, and certain unreimbursed medical expenses. With a Roth, you can always withdraw your own contributions (not earnings) penalty-free and tax-free, since that money was already taxed on the way in.
Traditional spousal IRAs are subject to required minimum distributions. If the owner was born before 1960, RMDs begin at age 73. For those born in 1960 or later, the starting age is 75.9Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs10Congressional Research Service. Required Minimum Distribution (RMD) Rules for Original Owners The first RMD is due by April 1 of the year following the year you reach that age; each subsequent RMD is due by December 31. Missing a deadline carries a 25% penalty on the amount you should have withdrawn.
Roth spousal IRAs have no RMDs during the owner’s lifetime. The money can sit and grow indefinitely.
Fixing Excess Contributions
Contributing more than the annual limit, or more than the working spouse’s earned income, creates an excess contribution. The IRS charges a 6% excise tax on the excess for every year it remains in the account, and that tax keeps compounding until the problem is fixed.
The cleanest fix is to withdraw the excess, plus any earnings on it, before your tax filing deadline including extensions. A timely removal avoids the 6% penalty entirely, and the SECURE 2.0 Act eliminated the separate 10% early withdrawal penalty that previously applied to the earnings portion for people under 59½.
If you miss that deadline, you can still withdraw the excess (though you’ll owe the 6% tax for the year it remained), or you can apply it toward the next year’s contribution limit while the 6% penalty continues to apply for each year the excess existed. For a spousal IRA, the usual cause of excess contributions is overestimating the working spouse’s earned income, so recheck the numbers before April if earnings are tight.
Divorce
A spousal IRA belongs to the spouse whose name is on the account, and that doesn’t change in divorce. The balance often gets split as part of the property settlement, though. Federal tax law allows a tax-free transfer of IRA assets to a former spouse as long as the transfer is spelled out in the divorce decree or separation agreement and the funds move directly from one IRA custodian to another.11Office of the Law Revision Counsel. 26 U.S. Code 408 – Individual Retirement Accounts
After the transfer, the receiving spouse’s portion is treated as their own IRA. They control the investments, choose when to withdraw, and owe tax on their own distributions. If the transfer isn’t handled correctly, for example if the account owner takes a distribution and hands the cash to the ex-spouse, the IRS treats it as a taxable withdrawal from the original owner’s account, plus a 10% penalty if the owner is under 59½.
Once divorced, the former non-working spouse can no longer receive spousal IRA contributions from their ex. They can still contribute to the existing IRA on their own, but only if they have earned income or remarry and file jointly with a new spouse who does.
Inheriting a Spousal IRA
What happens after the owner’s death depends on who inherits.
A surviving spouse has the most flexibility. They can roll the inherited IRA into their own IRA and treat it as if it had always been theirs, which resets the RMD clock and lets them name new beneficiaries. They can also keep it as an inherited IRA and take distributions based on their own life expectancy. Rolling it over is usually the better move for a surviving spouse who doesn’t need the money right away.12Internal Revenue Service. Retirement Topics – Beneficiary
Non-spouse beneficiaries, including adult children and siblings, generally must empty the account within 10 years of the owner’s death.12Internal Revenue Service. Retirement Topics – Beneficiary If the owner had already started RMDs, the beneficiary must take annual distributions during that 10-year window. If the owner died before their required beginning date, the beneficiary can spread withdrawals however they like, as long as the account is empty by the end of year 10.
A narrow group of eligible designated beneficiaries can stretch distributions over their own life expectancy. This includes minor children of the account owner (until they reach the age of majority), individuals who are disabled or chronically ill, and beneficiaries who are no more than 10 years younger than the deceased owner. Once a minor child reaches adulthood, the 10-year clock starts for them.