Money Talk with Malik | Financial Planning for Builders

Key Takeaways

A spousal IRA lets a working spouse contribute to an IRA in the name of a non-working or lower-earning spouse
In 2024, each spouse can contribute up to $7,000 per year ($8,000 if age 50 or older), meaning up to $14,000 total per household
Income limits for traditional IRA deductibility and Roth IRA eligibility apply based on household income
High-earning physicians typically can't contribute directly to a Roth IRA, but the backdoor Roth strategy applies to spousal IRAs too
This doubles your retirement account contribution capacity without any additional earned income requirements on the non-working spouse

Most of the physician households I work with are set up where one person is the primary earner and the other either isn't working or works part-time. The attending physician is maxing out their 403(b). Maybe they've set up an HSA. But there's a retirement account sitting completely unused in the spouse's name.

That's real money left on the table every year.

What Is a Spousal IRA?

An IRA (individual retirement account) typically requires the account owner to have earned income. You can't contribute $7,000 to an IRA if you made zero dollars that year.

The spousal IRA is the exception to that rule. It allows a working spouse to fund an IRA in the name of a non-working or lower-earning spouse, as long as the couple files taxes jointly. The contribution limit is the same as a regular IRA: $7,000 per person in 2024, or $8,000 if the spouse is 50 or older.

The IRA belongs to the non-working spouse. It's in their name. But it gets funded from the household income.

Why This Matters for Physician Households

Say you're an attending physician earning $300,000 and your spouse stays home with kids or works part-time. You're probably maxing your 403(b) at $23,000. That's solid. But you have capacity for $7,000 more in a spousal IRA that most households ignore.

Over 20 years, $7,000 per year in a tax-advantaged account compounds into a meaningful number. At a 7 percent average return, that's roughly $287,000. And that's the conservative version, because this doesn't count employer match or investment outperformance.

The bigger point is that this is a way to get two people's retirement accounts growing even when one person isn't earning income. That matters a lot for households where one parent took time off for kids, one spouse is in school, or there's any other reason only one person is working right now.

Traditional vs Roth: Which One?

This is where it gets nuanced, because income matters for both types.

For a traditional IRA, if the contributing spouse is covered by a workplace retirement plan (like a 403(b)), the deductibility of the IRA contribution phases out at certain income levels. For married filing jointly in 2024, the phase-out starts at $123,000 and ends at $143,000 of modified adjusted gross income. Above $143,000, the traditional IRA contribution is not deductible. You can still contribute, but there's no upfront tax benefit.

For a Roth IRA, the income limit is higher. Phase-out starts at $230,000 and ends at $240,000 for married filing jointly in 2024. Most attending physicians are above this range, which means a direct Roth IRA contribution isn't allowed.

That brings us to the strategy most high-earning physicians need.

The Backdoor Roth for a Spousal IRA

The backdoor Roth is not complicated, but it has steps. Here's how it works for a spousal IRA:

Open a traditional IRA in the non-working spouse's name.
Contribute the non-deductible amount ($7,000 for 2024).
Fill out IRS Form 8606 to document that the contribution was non-deductible.
Convert the traditional IRA to a Roth IRA. The conversion is tax-free if the balance is entirely from non-deductible contributions.

Now the $7,000 is in a Roth IRA, growing tax-free, with tax-free withdrawals in retirement.

The big caveat: if the non-working spouse has other traditional IRA money (pre-tax IRA from previous years), the pro-rata rule applies and the conversion gets more complicated. If that's the situation, talk to a CPA before doing the conversion.

What If the Spouse Has a Little Earned Income?

If your spouse earns some income, say $20,000 from part-time work, they can contribute to their own IRA based on their actual earned income. The spousal IRA rule becomes relevant when their earned income is less than the contribution limit, or zero.

If the spouse earns $3,000 and wants to contribute $7,000, they can contribute $7,000 total using the spousal IRA rules as long as the household filing jointly has at least $7,000 in combined earned income.

How to Actually Set This Up

Opening a spousal IRA is the same as opening any IRA. Fidelity, Vanguard, and Schwab all let you open one online in about 20 minutes. The account is in the non-working spouse's name and Social Security number. The funding comes from your joint checking account.

The contribution deadline is the tax filing deadline, including extensions, usually April 15. So you have until April 15, 2025 to make a 2024 contribution.

One thing to do when you open the account: set up automatic contributions. $583 per month to hit $7,000 by year-end, or whatever cadence works for your cash flow. Set it and let it run.

Common Mistakes to Avoid

Over-contributing. The total household IRA contributions can't exceed total household earned income. If your spouse has zero income and you have $300,000, you have plenty of room. But if you're contributing to your own IRA and the spousal IRA, make sure the combined amount doesn't exceed earnings. For most physician households this isn't an issue, but it's worth knowing.

Forgetting Form 8606. If you're doing non-deductible contributions and converting to Roth, this form is how you track your basis. Missing it causes problems down the road when you try to figure out what's taxable and what isn't.

Skipping it because it seems small. $7,000 a year feels small relative to a physician's income. But retirement wealth is built in layers. The 403(b) is one layer. The HSA is another. The spousal IRA is another. These add up over a career, and each layer grows tax-advantaged. Don't leave any layer empty just because it doesn't feel significant.

Summary

If your spouse isn't working or earns less than the IRA contribution limit, a spousal IRA gives you an extra $7,000 per year in retirement account capacity. For most physician households, that means a backdoor Roth IRA for the non-working spouse.

It's one of the simpler retirement moves available and one of the most consistently overlooked. Open the account, fund it, document the non-deductible contribution, do the conversion, and do it again next year.

The boring stuff done consistently is how wealth actually builds.

Malik Amine is a financial advisor working with tech founders and physicians. This is general education, not personalized financial or tax advice. Consult a CPA about your household's specific IRA strategy.