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What you need to know about combining retirement accounts with your spouse

There's no such thing as a joint retirement account, but you can still save for the future together.

Jonathan Gelber | fStop | Getty Images

It's likely you've spoken with your spouse about managing finances before you said your "I do's," yet there's a good chance you left a big topic off the table, given it may not have been top of mind at the time — and that's retirement.

You and your partner's golden years may be decades away, but it's still crucial that you know the age each other wants to retire at and what kind of lifestyle you want to lead. One person may want to downsize to a smaller home to save money while the other may want to spend their nonworking years traveling the world.

Once you know what retirement as a couple will look like, it's time to talk about how you plan to save up for it together.

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What to know about combining retirement accounts with your spouse

Unlike combining money in a joint checking account, you cannot combine retirement accounts with your spouse. With 401(k) accounts, since these are tied to employment at a company, only the employee can enroll and contribute to one. And with IRAs, the name "individual retirement account" means that there is only one owner on the account.

The caveat here, however, is that spouses can name, or designate, the other as a beneficiary in their retirement accounts. In this case, your spouse who you named as a beneficiary cannot contribute to your plan, but they would have access to your account and funds should something happen to you. In the event of a death, the other spouse would inherit the account and could roll it into their own 401(k) or IRA. Making each other the beneficiaries on your own retirement accounts ensures that you're both taken care of for the future.

There's also something called "spousal IRAs," which may sound like a joint retirement account, but it's not. Spousal IRAs act more as arrangements for partners who are unemployed or making a low income. A spousal IRA is essentially a traditional or Roth IRA that a working spouse contributes to in the name of their non-working spouse to use as their retirement vehicle. Usually, IRAs require individuals to have earned income to contribute. In order to apply for a spousal IRA, you must be married and be filing a joint tax return.

Why both spouses should open an IRA separately

While you're still able to contribute to a retirement account, it's worth maximizing both your IRAs to receive the greatest tax benefits. Both traditional and Roth IRAs have the same contribution limits: For 2022, those under age 50 can make a total contribution into their IRAs of up to $6,000, but if you both open an account, that's a combined $12,000 annually. Plus, if you and/or your spouse is 50 and older, don't forget that you can each contribute an additional $1,000 per year as a "catch-up" contribution, which brings that combined total to $14,000.

Consider opening an IRA at one of the top brokerages like Charles Schwab or Fidelity. Or consider a robo-advisor like Wealthfront, SoFi and Betterment, which build and manage a custom portfolio based on your age, risk tolerance and investment time horizon. Each offer traditional and Roth IRAs, as well as retirement planning tools to help you and your spouse stay on track.

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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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