funding a spousal IRA by trustee transfer
Client wants to know if he can fund a spousal IRA for his wife by transferring cash and or securities from his IRA? Can he transfer more than the annual contribution amount plus catch up contributions? Will this be a taxable event?
Permalink Submitted by Alan Spross on Wed, 2009-03-18 22:18
Funds cannot be transferred from one spouse’s IRA to the other spouse until the transferor spouse is deceased. While both are living, contributions can only be made from cash contributions or rollovers from an eligible account owned by the same spouse.
The exception here could occur as the result of a divorce action where a court order was received for a transfer incidental to divorce.
Permalink Submitted by mk foss on Thu, 2009-03-19 01:11
The only way to fund the spousal IRA using his IRA would be to take a taxable distribution in cash and use that for a spousal IRA. The spousal IRA limit (including catch-up) would be all that could be transferred. It is possible to transfer both the 2008 and 2009 contributions at once, but he would be taxable on twice as much that way.