If you are married and file a joint tax return, you can contribute to an IRA for your spouse in addition to your own IRA. Contributions may be permitted to either a Traditional IRA or a Roth IRA regardless of whether your spouse earns any income or is eligible to participate in an employer-sponsored plan, such as a 401(k).
For a spouse who does not participate in an employer-sponsored plan, contributions to a Traditional IRA are:
- Fully deductible for married couples with $166,000 or less in modified adjusted gross income (MAGI) for tax year 2009
- Partially deductible for married couples with a MAGI of more than $166,000 and less than $176,000 for tax year 2009
Married couples with a MAGI of $176,000 and above for tax year 2009 may still make, but not deduct, contributions to a Traditional IRA.
Contributions to a Roth IRA are never tax-deductible; however, contributions and any earnings can potentially grow tax-free for retirement. In order to contribute to a Roth IRA for yourself or your spouse, married couples must have a MAGI of less than $176,000 for tax year 2009.*
In general, if you plan to stay invested for five years or more, you don't expect your taxable income to significantly decrease in retirement, and you don't plan to withdraw the assets before age 59½, a Roth IRA may be the better choice for long-term retirement savings.
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