Contributing to your traditional individual retirement account provides you with a number of benefits, but adding your wife is not one of them. By definition, an "individual" retirement account is just that: for one individual. She can, however, contribute to her own IRA or -- if she does not earn any money -- you can contribute to a spousal IRA on her behalf.
Married Filing Jointly
When you file a joint tax return, you and your spouse combine your incomes and deductions into on a single return. Filing a joint return usually results in a lower combined tax obligation than you would have if you filed separately, but both spouses are jointly responsible for any tax liability that results. Filing a joint tax return also allows both spouses to open and contribute to a traditional IRA, even if only one spouse had earned income for the year.
The Internal Revenue Service refers to an IRA where one spouse's earned income is used to qualify the other spouse for contributions as a "spousal" IRA. A spousal IRA is not an extension of the working spouse's IRA, nor is it a joint IRA. There is no such thing as a joint IRA. A spousal IRA is a separate account. Once a contribution is made to the spousal account, the assets in that account belong to the non-working spouse.
Contribution limits for a spousal IRA mirror the limits for an ordinary traditional IRA. For the 2012 tax year, if you are under 50 years old you can contribute up to $5,000 into a spousal IRA, as long your combined earned incomes support the contribution. For example, if you have earned income of $50,000 and your wife is a stay-at-home mom with no income, you can contribute $5,000 to your traditional IRA and another $5,000 to your wife's spousal IRA. The maximum contribution increases to $6,000 if you are at least 50 years old.
You cannot contribute to a spousal IRA on behalf of your wife if you file separate returns. If you contribute less than the maximum allowed by law to your wife's spousal IRA in one year, you cannot make up the difference in subsequent years. The amount of your tax deduction might be reduced or eliminated if your adjusted gross income exceeds $173,000 for the 2012 tax year. While you cannot add your wife to your traditional IRA, you can designate your wife as your beneficiary in the event of your death.
Mike Parker is a full-time writer, publisher and independent businessman. His background includes a career as an investments broker with such NYSE member firms as Edward Jones & Company, AG Edwards & Sons and Dean Witter. He helped launch DiscoverCard as one of the company's first merchant sales reps.