Opening retirement accounts with tax benefits like a Roth IRA can help you save for retirement, but tax-advantaged accounts are subject to many rules and conditions that can complicate finances. Married couples can file joint tax returns and share ownership of certain types of financial accounts, but Roth IRAs cannot be owned jointly. You can, however, open your own Roth IRA and contribute to a different Roth IRA on behalf of your spouse.
Roth IRA Basics
IRA stands for "individual retirement account," which means only individuals can own IRAs. As a result, you can't open a joint Roth IRA with a spouse. You and your spouse can have separate Roth IRAs to increase retirement savings. The annual contribution limit for Roth IRAs is $5,000 or $6,000 if you are age 50 or older. If you save $5,000 in your IRA and your spouse saves $5,000 in her IRA, you can contribute $10,000 to IRAs as a couple each year, even though the accounts are not held jointly.
IRAs generally require you to have earned income to make contributions. Earned income is money gained from working at a job or from self-employment. An exception is made for married couples where one spouse has earned income and the other has little or no income: the earned income of the breadwinner counts as income for the spouse with little or no income. In other words, you can use your earned income to contribute to a Roth IRA on behalf of your spouse.
You may not be eligible to open a Roth IRA for yourself or your spouse if your annual income exceeds certain limits. According to the Internal Revenue Service, you can only contribute to a Roth IRA if your modified adjusted gross income is under $183,000 as a joint filer and you can only contribute the maximum amount if your income is under $173,000. If you file a separate tax return, you cannot contribute to a Roth IRA unless your income is under $10,000.
Inheriting an IRA
When you open an IRA, you typically have the option to designate a beneficiary who inherits the account if you pass away. If your spouse is your IRA beneficiary, she can treat your IRA as her own IRA when you pass away, giving her the ability to control the investments in the account and to choose when to withdraw funds. IRA beneficiaries other than spouses do not have this option.