CPA Sample Client Letter: Spousal IRA Contribution Limits.

(Parker Tax Publishing October 2025)

Dear [Client],

One of the most overlooked tax breaks for individuals is the spousal IRA, which allows a spouse who does not have enough taxable compensation to make a maximum IRA contribution to use a portion of the other spouse's taxable compensation in calculating his or her own allowable contribution for the year.

For 2025, the most you can contribute to a traditional IRA is the lesser of

(1) $7,000 ($8,000 if age 50 or older); or

(2) your taxable compensation for the year.

If you have more than one IRA, the contribution limit applies to the total contributions made to all your traditional IRAs for the year. If you or your spouse was covered by an employer retirement plan for which contributions were made (by you, your spouse, or your employers), your deduction for contributions to a traditional IRA may be reduced or you may not qualify for a deduction at all.

How Spousal IRAs Work

Generally, if you are married, then you and your spouse must calculate your limits separately, using your own compensation. This is the rule even in states with community property laws. However, under the spousal IRA limit, the spouse with the lower amount of compensation may be able to use a portion of the other spouse's taxable compensation in calculating his or her own maximum contribution for the year.

Specifically, the maximum contribution for 2025 by the lower-earning spouse is the lesser of (1) $7,000 ($8,000 if age 50 or older); or (2) the total compensation includible in the gross income of both spouses for the year, reduced by the amount the higher-earning spouse contributed to his or her own IRA for the year.

Spousal IRA Example

For example, let's say you have taxable compensation of $100,000 for 2025, your spouse has no taxable compensation for the year, and you're both age 50 by the end of the year. If you contribute $8,000 to your IRA, your spouse can add your compensation, reduced by your IRA contribution ($92,000 = $100,000 - $8,000), to her compensation ($0) to calculate her maximum contribution to a traditional IRA. Because her taxable compensation is now deemed to be $92,000 for purposes of calculating her limit, she can make the maximum contribution allowed by law ($8,000).

The result would be the same if your taxable compensation were as low as $16,000. As long as your combined taxable compensation is at least as much as your combined maximum contributions, you can both max out your contributions.

Please feel free to call if you have any questions about spousal IRAs.

Sincerely,

[Your Name, Your Firm]

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