What are spousal IRA’s, how do they work? When can you use them? And does it make sense for you? So we’re going to give you a quick link and this is a concept that I was completely unaware of. And I just wanted to bring it up as a new and unique topic for you, something I hadn’t heard of.
So we had this website here for you with Vanguard and a spousal IRA. If we go ahead and scroll down through this Omkar, we’re going to have some definitions that it kind of defines for us. We’re going to chat this link in for you as well.
So the spousal spousal IRA is typically you need you need earned income to contribute to an IRA, right? As each person, but with a spousal IRA, one of the two parties doesn’t have to have the income and they can get the contribution from the other party.
So what that allows in certain situations, you might have one person that has earned income in one person that doesn’t right? And whatever that is now, the spousal IRA is going to fill the gap and allow both parties to actually contribute towards retirement savings and build up because in a relationship there could be some inequity and we’re an equity would happen if one person has a bunch of retirement savings in the other person doesn’t.
And then this person kind of like stronger than the other. But this way you can both contribute to the IRA and be building equity kind of together into retirement accounts. But in your own individual names, it’s a way to encourage and allow people who might have been disenfranchised in the past to continue to build on their retirement savings kind of pretty interesting.
And there would be both a traditional IRA and a Roth IRA that are available to be done in this manner under the spousal umbrella that it’s contributed from one party to the other. As far as their earned income goes, this helps you out with retirement savings, and the Roth IRA has tax advantages on when you withdraw the money over the traditional IRA.
So there would be some minor differences there, but you can take a look and see if it makes sense for you. It does review that the maximum amount that you can contribute is seven thousand if you are 50 or older or six thousand if you are under that particular age, they allow for more. It’s kind of like catching up of items there, so kind of covers that topic for you.
The link we did give you with Vanguard and we put that up there for you. And so you can take a look at it in your free time and see if that makes sense not only for you or for some of your clients as it comes up, because you do become a a person who discusses many things right?
And you can withdraw money from your IRA account or your 401K 401k account to use for home purchases. And when you’re discussing this, this is when this other item could come up if one of the two parties doesn’t necessarily have earned income, but they want to continue or start to go ahead and save.