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Hello Sarah,

You asked:
My husband is a self emlpoyed farmer, and I am currently a stay at home mom with no earned income. How do we work the "spousal IRA" so that we can both contribute our $2000 each year? Can a spousal IRA be any kind of IRA? Can it be a ROTH IRA?

If your hsuband is a fulltime farmer, then you are probably not the fulltime mom you think you are. Please don't be offended by that statement. I am a county extension agent and I don't know many farm families where the spouse doesn't help do the books, pick up parts, and generally help out when needed. As such, you are an employee, whether you have ever drawn a pay check or not. You should be putting a value on your time, if you help out like that. This would qualify you for more than the spousal IRA.

Also, I saw something on a past post about SEP or SIMPLE being a good choice for self employed people. We do have one employee. How does this plan work? Can we, as the employer participate too? Are contribution limits higher with these?

There are several options for small employers, the SEP-IRA, Keogh, Simple-IRA, and 401k plans. The SEP-IRA is probably the simplest and the cheapest to implement. (But check with your CPA.) As a farmer, your husband is both the owner and an employee. Therefore he is eligable, and your employee would also be eligible. If, as I mentioned previously, you help out occasionally, then you can be counted as an employee as well. Not only are the contribution limits higher, you still qualify to contribute to an IRA if your AGI falls below the IRS cutoffs. (I don't remember what those are at this time. See Publication 590, for those.)

Good luck in your retirement planning.


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