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1. Do we need to specifically ask for a "Spousal IRA" when opening this account with a financial
institution? In other words, are the forms different from those of a regular IRA? And if so, will most
institutions know what I am talking about?

No, No, and No. <grin>

2. What happens if the non-working spouse earns over the $250/year limit? Does this make the Spousal IRA invalid? If so, can it then be converted or rolled into a regular IRA in order to avoid taxes and penalties?
IIRC, the $250 limit on income only affects your spouse's status as working vs. non-working, but does not affect her (I'm guessing it's a she, eddie) ability to contribute $2K per year. What may be affected (don't quote me!) is her ability to deduct her contribution to a Trad. IRA if she is working. But if you contribute to a Roth, it's no factor since all Roth contributions are non-deductible anyway.

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