The Roth IRA is a pretty awesome way to save money for retirement. I’ve written about it before. I’ve made a video explaining it. I even composed and performed a love song to Roth IRAs.

But even as a self-professed lover of Roth IRAs, I got stumped from a twitter question I got last night from Michael Zook:

@kevin_is_money can we max out my wife’s roth ira if her income is less than $5,000? Your Roth IRA video was amazing

My first instinct was to say no. Roth IRA contributions (up to a max of $5,000 for people under 50 years old and $6,000 for those who are 50+) must be equal to or less than a person’s taxable earnings. Therefore, if someone’s wife hasn’t earned $5,000 for the year then I didn’t think she would be eligible to contribute $5,000.

roth iraI had the response halfway written before I thought I might want to research to confirm. The concept that I, Kevin McKee, maker of Roth IRA videos, might not know everything about them made me feel a little sick.

But let’s face it, I wasn’t sure.

Google actually wasn’t much help on my poorly worded, “Can a wife contribute $5k to a Roth IRA when her husband is the one raking in all the dough?” I found a few blogs that didn’t have the info I wanted, and I wasn’t even sure if I could trust them anyway (because I’m a blogger and at the time I didn’t trust myself).

I decided to check the official IRS website.

IRS Rules on Spousal IRAs

I found the answer I was looking for on the Retirement Topics – IRA Contribution Limits page.

Here it is:

If you file a joint return, you and your spouse can each make IRA contributions even if only one of you has taxable compensation. The amount of your combined contributions can’t be more than the taxable compensation reported on your joint return. It doesn’t matter which spouse earned the compensation.

Boom. If they make more than $10k combined (or $12k for those 50+ folks), then they can max out both the husband’s and the wife’s IRAs.

I was wrong.

At least I was smart enough to hold off on my reply until I knew I had the right answer. In fact, no one ever would have known if I hadn’t just shared my ignorance with all of you. But I’m not here to save face, I’m here to help people find some answers and entertain a bit.

So to all you married folks out there, don’t worry about having $5k of earned income for each of you. As long as you file jointly then one person’s income counts for the other person’s as well.

Readers: Do you forgive me for not knowing all the rules about IRA for married people? Do you think I should get married just so I can have a better understanding of financial rules for married folks?

photo credit: PT Money

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