Requirements of a Spousal IRA
There are a number or requirements needed in order to be eligible for this form of account:
You have to be legally married by the end of the tax year and filling out any tax forms together.
The fully employed spouse must be earning enough to be able to pay for both IRAs.
In order to open a normal IRA an individual must not be older than 70.5 years of age.
The total amount which is put into both IRAs must not be more than the taxable compensation stated on the joint tax return.
The amounts contributed must not exceed the specific contribution limits.
Benefits of a Spousal IRA
The benefit of using a spousal IRA is that it allows both partners to put $5,000 into their IRAs every year. Once over 50 years of age then it’s possible to deposit $6,000. This means that through a spousal IRA it’s possible to contribute anywhere from $10,000 to $12,000 combined every year. Without a spousal IRA, it becomes much more complicated if one partner only works part time or stays at home but wants to contribute the maximum amount. Through such investing it’s possible for a couple to save a substantial amount of money in terms of income taxes. With an IRA they can save up to $12,000 every year as well as lessening possible future taxes once retired.
A real estate IRA is a financially secure method in which to ensure you have enough for both you and your spouse in retirement. However, if you find that you don’t have enough funds, even through your spousal IRA, you can apply for a non recourse loan. With an IRA account you are unable to take out a normal loan; however you can apply for a non recourse loan. This is because the Internal Revenue Service regulations stipulate that you cannot personally guarantee the repayment of any debt incurred with qualified retirement account investments. In essence, if you were to default on the non recourse loan, only your property pledged as collateral could be seized by your lender but no other funds held in the IRA or any personal assets. Non recourse loans are a prime choice for leveraging your IRA because of this fact.
In terms of inheritance, such an account makes it easier for a spouse to obtain IRA funds. The IRS ensures that partners can have particular concessions when obtaining their spouse’s investments. If they’ve been named as the beneficiary then this process is very simple: the money from the IRA is simply transferred into the other’s retirement plan, all without additional tax fees. It’s also possible for them to transfer an IRA in a will into their own personal IRA.
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Article Added on Friday, August 26, 2011
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