Anyone with earned income can make a non-deductible (after tax) contribution to an IRA and benefit from tax-deferred growth.

Can a spouse contribute to an IRA for a non-working spouse?

Spousal IRAs allow working spouses to contribute to an IRA for a non-working spouse. Spousal IRAs are the same as Roth or traditional IRAs but are designed for married couples. Couples must file joint returns to contribute to a spousal IRA.

Are spousal IRA contributions deductible?

If you or your spouse is covered by an employer plan, a contribution to a spousal Traditional IRA may be limited for a deduction from federal income taxes. If your spouse is covered by an employer plan, couples can take a full deduction based on their combined modified adjusted gross income.

Can my wife contribute to my IRA?

If one spouse has eligible compensation, that spouse can make IRA contributions for an IRA for the nonworking spouse. Traditional and Roth IRAs have the same contribution limits but different eligibility requirements. Each spouse’s IRAs must be held separately as IRAs cannot be held jointly.

Is a non-deductible IRA worth it?

Clearly, a non-deductible IRA isn’t as good as a traditional IRA or Roth IRA. And in most cases it isn’t as good as other retirement accounts, like a 401(k) or even a health savings account. If those options are available, it’s almost always best to maximize them first before even considering a non-deductible IRA.

Can a non-working spouse make a deductible IRA contribution?

A nonworking spouse can open and contribute to an IRA A nonworking spouse can contribute as much to a spousal IRA as the wage earner in the family. The annual contribution limit for IRAs, including Roth and traditional IRAs, is $6,000. If you’re age 50 or older, you can contribute an additional $1,000 annually.

How are nondeductible IRA contributions treated by the IRS?

But any nondeductible IRA contributions are treated as your basis (your sum total). Since you effectively paid tax on the money when you made the contribution, you won’t have to pay tax on it again later. The IRS keeps track of filers who have paid taxes on nondeductible contributions with the mandatory Form 8606. 2 

Can a spouse contribute to a non-deductible IRA?

Unlike a traditional IRA, which is tax-deductible, nondeductible IRA contributions are made with after-tax dollars and provide no immediate tax benefit. In a given tax year, as long as you or your spouse have enough earned or self-employment income, you can each contribute to an IRA.

Are there limits to how much you can contribute to a non deductible IRA?

Nondeductible contributions have their own eligibility rules and contribution limits that must be observed. Savers must also keep track of their own contributions to nondeductible plans, so that they can be taxed appropriately upon retirement withdrawals.

Can a non deductible IRA be commingled with a Roth IRA?

And unlike a Roth IRA, deductible and non-deductible IRA contributions can be commingled in the same account. Non-deductible contributions to an IRA don’t provide an immediate tax benefit because they are made with after-tax dollars.