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Investing :  IRA

Thanks to the Taxpayer Relief Act of 1997, working spouses are now allowed to contribute up to $2,000 to an Individual Retirement Account known as a spousal IRA. Spousal IRAs were designed so non-working spouses could fully fund an IRA account even if they had no income for the year. The spousal IRA is simply a great way for stay-at-home mothers to save for retirement and have an account in their own name.

There are no special rules that govern how spousal IRAs work. And despite all the hype and misunderstanding, spousal IRAs aren't really a separate type of IRA -- just a way to label how they will be funded. Consequently, spousal IRAs can be set up as either Traditional or Roth IRAs.

Spousal IRAs are available to:

• Married couples (legally by the end of the tax year).
  
  
• Married couples who file a joint tax return.
  
  
• Married couples where at least one spouse has taxable income for the year.
  
  
• Spouses who are under age 70 1/2.

Contributions

Working spouses are allowed to contribute up to $2,000 a year to an spousal IRA provided total contributions for both spouses don't exceed $4,000 or 100% of income, whichever is less. Contributions made to a spousal IRA may be tax-deductible even if the working spouse is an active participant in an employer sponsored retirement plan. Under these conditions, modified adjusted gross income (AGI) will be the determining factor.

Deductibility Schedule: