An individual retirement account is a tax-advantaged financial plan you can open on your own with a financial institution like a bank or mutual fund company. Spouses can freely transfer most assets to each other without any tax consequences, but transfers of IRAs are limited to special cases: divorce and death. Aside from these cases, you can contribute to an IRA on behalf of your spouse.
IRA Ownership Basics
IRA stands for "individual" retirement account, which means only one person can own it. You cannot own a joint IRA with a spouse, and you can't transfer your own IRA to a spouse whenever you please. You can withdraw money from the IRA and give that money to your spouse, but that involves transferring cash rather than the IRA itself. You might face tax consequences for doing so, as withdrawals from traditional IRAs are subject to income tax. And you'll pay an early withdrawal penalty of 10 percent if you withdraw the money before you turn 59 ½.
You can transfer an IRA to a spouse or former spouse in the event of divorce. According to the Internal Revenue Service, a decree of divorce or separate maintenance can result in a transfer of an IRA from one spouse to another. The spouse receiving an IRA in a divorce can change the name on the IRA or transfer the assets in the IRA into a new or existing IRA. IRA transfers done during divorce are not taxed.
Inheriting an IRA
An IRA also can be transferred to a spouse as an inheritance after you die. When you open an IRA, you can name a beneficiary for the account. If your spouse is your IRA beneficiary, she can treat your IRA as her own personal account or transfer the funds into a different IRA.
While you can't transfer an IRA to a spouse outside of divorce or death, you can contribute to an IRA on behalf of a spouse. Contributing to an IRA normally requires earned income, but income you earn counts as earned income for both you and your spouse if you file a joint tax return. This means you can contribute the maximum amount to your own IRA and an IRA for your spouse whether your spouse works or not.