Generally, you can’t contribute to an individual retirement account (IRA) unless you earn an income in a given year. The spousal IRA, however, is an exception to this rule, allowing each spouse in a couple to contribute up to the maximum if one of them earns an income. Under Spousal IRA rules, the spouse who doesn’t work or earn income can fund an individual retirement account, provided they file a joint tax return with their working spouse. The spousal IRA account can be a traditional IRA or a Roth IRA.

Individual retirement accounts opened under spousal IRA rules are not co-owned. The working spouse and the non-working spouse each own IRAs under their own names. They can be accounts each spouse opened before they were married, while they were married and both working, or one that the non-working spouse opened when he or she was not working.

Spousal IRAs have the same annual contribution limits as any other IRA: $7,000 per individual in 2025 and $8,000 or people who are aged 50 or older. Each spouse can make a contribution up to the current limit.

The following rules apply to spousal IRAs:

• Account Owner: The account owner does not change, no matter who funds the account. When contributing to spousal IRAs, each spouse remains the named account owner of their IRA, independent of where the contributions come from.
• Joint Return: Married couples must file a joint tax return to be eligible.
• No Age Limit: There is no age limit on spousal IRA contributions. As long as at least one member of the couple is earning income, you can contribute to your IRA no matter how old you are.
• Maximym Income Limits: Total marital income is considered for Roth IRA contribution limits.

Traditional IRA tax deduction rules are the same for spousal IRAs. For married couples with only one working spouse, the amount that can be deducted from taxes depends on whether the spouse who works is covered by a retirement plan at work or not.

Normally, withdrawals from an IRA prior to age 59 1/2 is not a good idea. It usually incurs a 10% tax penalty, and even when allowed under the following circumstances, it is still subject to regular income tax. Here are some of the major reasons to access retirement funds early:

• Roth Conversion: To move qualified (pre-tax) IRA investments to an after-tax account. One way is to set up a Roth conversion ladder where a certain amount is converted to a Roth IRA each year. After a 5-year waiting period, funds can be withdrawn from the Roth account.
• Lost Job: You lost your job in the same calendar year you turned 55 or older. Under the IRS Rule of 55, you can withdraw funds from your current employer's 401(k) without paying a penalty.
• SEPP: You are willing to commit to taking fixed, regular withdrawals over a specific time period, which cannot be changed until you reach 59 1/2. This is referred to as SEPP (Substantially Equal Periodic Payments).
• Emergency: You have emergency personal or family expenses, allowing access up to $1,000 (once a year).
• Abuse Survivor: You are a survivor of domestic abuse, allowing withdraw of the lesser of $10,000 or 50% of your retirement account.
• Disaster Victim: You are a victim of a federally declared disaster, allowing withdrawal of up to $22,000 from your retirement account. The withdrawal is treated as gross income over three years without penalty.
• Birth or Adoption: A new child joined your family for which you can withdraw up to $5,000 to cover qualified birth/adoption expenses.
• Medical: You have unreimbursed medical expenses enabling you to withdraw up to 7.5% of your Adjusted Gross Income. You can also cover health insurance premiums while unemployed with IRA withdrawals.
• Homebuyer: You are a qualified first-time home buyers allowing you to withdraw up to $10,000 penalty free. But this is only for IRAs, *not 401k withdrawals.
• Terminal illness: If you’re certified by a physician as being terminally ill, you can take out penalty-free withdrawals. Also, if you die, then your money can be taken out penalty free for survivors.