If you’re married and in a single-income household, a lesser-known retirement strategy could boost your nest egg — and there’s still time to use it for 2024.

A spousal individual retirement account is a separate Roth or traditional IRA for the non-working spouse. With this strategy, two IRAs can be maxed out annually with enough income from the working spouse. The deadline for 2024 contributions is April 15.

“Spousal IRAs are a game changer for married couples looking to build retirement savings and manage their lifetime tax burden,” said certified financial planner Jim Davis, partner at Aspen Wealth Management in Fort Worth, Texas.

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For 2024, the IRA contribution limit is $7,000, plus an extra $1,000 catch-up contribution for investors age 50 and older. The caps are the same for 2025.

That means an older married couple with sufficient earned income could save up to $8,000 per IRA for 2024 before the April 15 tax deadline. They’ll have until next year’s tax due date for 2025 IRA contributions.

“For many, it’s a simple yet powerful step toward achieving long-term goals,” Davis said.

To qualify, you must file taxes jointly and your combined IRA contributions can’t exceed “taxable compensation” reported on your tax return, according to the IRS. The strategy could also work if one spouse is unemployed without enough 2024 earnings to contribute to an IRA on their own.

Roth IRAs are funded with after-tax dollars and offer future tax-free growth, but there’s an income limit. Traditional IRAs could provide an upfront tax break, depending on your income and workplace retirement plan participation.   

Traditional IRAs are the oldest and most common type of IRA, owned by 31.3% of U.S. households as of mid-2023, according to research from the Investment Company Institute.

Nearly two-thirds of families with traditional IRAs have accounts with retirement plan rollovers, and 43% made contributions on top of rolled over funds, ICI found.  

These accounts continue to grow, and many retirees don’t have a plan to withdraw the money, experts say.

“Your IRA is an IOU to the IRS,” said Slott, who is also a certified public accountant.

Starting at age 73, pre-tax retirement accounts are generally subject to required minimum distributions, or RMDs, based on your previous year-end balance and a life expectancy factor.

By comparison, Roth accounts, which are funded with after-tax dollars and grow tax-free, don’t have RMDs until after the accountholder’s death. But these accounts are less common. As of mid-2023, only 24.3% of households had Roth IRAs, according to ICI.

Under the Tax Cuts and Jobs Act enacted by President Donald Trump, income tax brackets have been lower since 2018. That provision could be extended past 2025 under the current Republican-controlled Congress.

Slott argues it’s better to pay income taxes now at “bargain basement rates” than withdrawing from a pre-tax IRA when rates could be higher, depending on future legislative changes.

You can do that by contributing to Roth accounts or making so-called Roth conversions, which incur an upfront bill, but grow tax free. With Roth accounts, “there’s no obligation to share with Uncle Sam,” he said.

Plus, Roth accounts avoid tax issues for non-spouse heirs who inherit your IRA since most beneficiaries must follow the “10-year rule,” and empty accounts within 10 years of the original owner’s death.

For example, if you’re philanthropic, you can make so-called qualified charitable distributions, or QCDs, at age 70½ or older, which transfer money directly from an IRA to an eligible non-profit, Levine said.

The move lowers your adjusted gross income since you can use the withdrawal to satisfy RMDs and helps reduce your pretax balance for smaller future required withdrawals.  

President Donald Trump says that he’ll sign an executive order later on Friday excluding certain student loan borrowers from the popular Public Service Loan Forgiveness program.

In remarks from the Oval Office, Trump said that “a lot of these people work for NGO organizations [non-governmental organization], for nonprofit organizations, that engage in illegal, or what we would consider to be improper activities supporting, for example, illegal immigration or foreign terrorist organizations.”

PSLF, which President George W. Bush signed into law in 2007, allows many not-for-profit and government employees to have their federal student loans canceled after 10 years of payments.

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