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Author: zafdor Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75379  
Subject: IRA for Spouse with no earned income? Date: 3/18/1999 7:51 AM
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After reading through the IRS docs, I have concluded
that I may contribute the full $2K to a spousal (Roth) IRA even though she has no earned income. It seems pretty cut and dried, but it also seems too good to be true, am I missing something?
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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9239 of 75379
Subject: Re: IRA for Spouse with no earned income? Date: 3/18/1999 10:31 AM
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Greetings, Zafdor, and welcome. You asked:

<<After reading through the IRS docs, I have concluded
that I may contribute the full $2K to a spousal (Roth) IRA even though she has no earned income. It seems pretty cut and dried, but it also seems too good to be true, am I missing something?>>


Nope, you're not missing a thing. Only one spouse needs to have earned compensation. As long as that's true and the unemployed spouse is younger than age 70 1/2, then up to $2K per year may be contributed to the unemployed spouse's IRA. Further, if the couple's joint Adjusted Gross Income is $150K or less, then that contribution is fully deductible on the couple's tax return because the unemployed spouse does not participate in an employer's qualified retirement plan.

Regards….Pixy


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Author: zafdor Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9240 of 75379
Subject: Re: IRA for Spouse with no earned income? Date: 3/18/1999 10:37 AM
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Holy guacamole, deductible too? I assume that that would apply only for a conventional IRA, not a Roth?

Now Pixie, can you talk to Uncle Sam about this marriage penalty thing?

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Author: IndecisiveFool Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9241 of 75379
Subject: Re: IRA for Spouse with no earned income? Date: 3/18/1999 11:20 AM
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Holy guacamole, deductible too? I assume that that would apply only for a conventional IRA, not a Roth?

I am sure TMFPixy was talking about traditional IRA's, not Roth, when it comes to deductibility.

..IF

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Author: TheOthermfa One star, 50 posts Motley Fool One Everlasting Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9243 of 75379
Subject: Re: IRA for Spouse with no earned income? Date: 3/18/1999 11:57 AM
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>Only one spouse needs to have earned compensation. As long as that's true and the unemployed spouse is younger than age 70 1/2, then up to $2K per year may be contributed to the unemployed spouse's IRA.<

Does the employed spouse's compensation have to "cover" the unemployed spouse? I.e., suppose the employed spouse makes only $2K. Can she contribute $2K to her IRA and $2K to her unemployed husband's as well?

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Author: SnootFool Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9244 of 75379
Subject: Re: IRA for Spouse with no earned income? Date: 3/18/1999 12:19 PM
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Pixy:
>Only one spouse needs to have earned compensation. As long as that's true and the unemployed
spouse is younger than age 70 1/2, then up to $2K per year may be contributed to the unemployed
spouse's IRA.<

TheOthermfa:
Does the employed spouse's compensation have to "cover" the unemployed spouse? I.e., suppose
the employed spouse makes only $2K. Can she contribute $2K to her IRA and $2K to her unemployed husband's as well?


No, in your scenario the maximum contribution would be a grand total of $2K, split (or not) whatever way the couple decides. To contribute the maximum into 2 accounts, the breadwinner must have at least $4K of earned income.

Cjris

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Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9245 of 75379
Subject: Re: IRA for Spouse with no earned income? Date: 3/18/1999 12:30 PM
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TheOthermfa: You asked, "Does the employed spouse's compensation have to "cover" the unemployed spouse? I.e., suppose the employed spouse makes only $2K. Can she contribute $2K to her IRA and $2K to her unemployed husband's as well?", but I suspect you already know the answer.

If the employed spouse made only $2,000 for the year, then $2,000 total is the limit for both IRAs - - $2,000 in employed psouse's IRA & 0 in unemployed spouses or 0 in employed spouse's IRA & $2,000 in unemployed spouse's IRA or any combination in between. In your words, the compensation must "cover" (be large enough) to support the contribution.

Regards, JAFO

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9246 of 75379
Subject: Re: IRA for Spouse with no earned income? Date: 3/18/1999 1:22 PM
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Zafdor,

<<Now Pixie, can you talk to Uncle Sam about this marriage penalty thing?

I talk, but the funny thing is I don't think he's listening to me. From the reaction I get he reminds me of Mrs. Pixy. :-)

Regards....Pixy

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