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IRAs For Stay-at-Home Spouses

Retirement Account Focus, Part VII

We've been reviewing methods for retirement savings that are focused on those who are currently working, but if you're a stay-at-home spouse that doesn't mean your side of retirement savings should be brushed to the wayside. Individual Retirement Accounts (IRAs) typically require that you earn income from work in order to have this type of account, but if you're married and your spouse is working there's a way to save in your name. To find out how just

You must file joint tax returns to qualify for a spouse-funded retirement account. If your household adjusted gross income is between $159,000 and $169,000 in 2008 or between $156,000 and $166,000 in 2007 (you still have a month to fund the account and call it a 2007 contribution!) your spouse can open a Roth IRA in your name. The maximum contribution for 2007 is $4000 and it's been raised to $5000 in 2008, but if your income is above the smaller number of the aforementioned income brackets you're eligible to make only a partial contribution.

So far we've only talked about the Roth IRA, but what about a traditional IRA account for a non-working spouse? Well, it's an option but a much more complicated one. Traditional IRA contributions are typically tax deductible, but the deductibility capacity of a spousal-IRA is dependent on whether your spouse is covered by a retirement plan at work.

Before making a decision about which IRA is the best choice for you, try running some numbers through an online calculator and you may want to talk to a professional if you're still not sure. It's certainly worth the effort — you and your husband can greatly increase your overall retirement savings by funding an additional IRA.

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