Spousal IRA Rules When Spouse Earns Misc. income

Submitted by Jeffrey Petrillo on Tue, 2023-10-17 00:57

I am planning to fund my spouse’s Roth IRA for 2023. However, even though she is not regularly employed, she did earn $3,000 in 2023 for some misc. consulting work. Does that disqualify her from having me fund the balance of her Roth IRA contribution for 2023? We are 60 years old and still income-qualify for Roth contributions.

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Permalink Submitted by David Mertz on Tue, 2023-10-17 02:02

As long as your spouse is the one with the lower compensation and you file a joint tax return, your compensation can be used to supplement your spouse’s compensation for your spouse to make an IRA contribution. However, if your compensation is lower because you earn even less, your spouse cannot use your compensation to support an IRA contribution.
Total IRA contributions are also not permitted to exceed the available compensation. Compensation for the purpose of supporting an IRA contribution is reduced by deductible contributions to employer-provided plans such as elective deferrals to a 401(k).