it’s essential to periodically review your retirement savings strategy. Life circumstances, such as changes in income, employment, or tax laws, can impact your optimal contribution levels and account choices. Regularly assessing your contributions ensures that you stay on track to meet your retirement goals and take full advantage of the tax benefits and growth potential each account offers.
Spousal IRAs offer a unique advantage for couples where one spouse has little to no earned income. As long as the couple files a joint tax return, the working spouse can contribute to a Spousal IRA on behalf of the non-working or lower-earning spouse.
The contribution limits for Spousal IRAs are the same as for individual IRAs. For 2024, this means the working spouse can contribute up to $6,500 to the Spousal IRA, and if both spouses are over 50, the catch-up contribution rules apply, allowing up to $7,500. This means a couple can potentially contribute $15,000 annually if both are eligible for catch-up contributions.
Understanding how much you can contribute to your retirement accounts each year is vital for effective financial planning. Contribution limits vary depending on the type of retirement account, your age, and your income. For instance, 401(k) and 403(b) plans typically allow higher contribution limits compared to IRAs, and catch-up contributions can further boost your savings if you’re 50 or older. Knowing these limits helps you maximize your contributions and take full advantage of the tax benefits associated with these accounts.
