Do you hear wedding bells ringing? If so, this article might be a good read for you. There are three IRA benefits available only to married couples. Keep reading and we will go into all of the benefits and potential perks that you can take advantage of using your Self Directed IRA!
Spouse’s Annual Contribution
Your spouse’s annual contribution may be the most often overlooked privilege. Let’s look at an example. Steven has earned income. Jenny does not. In this case, Jenny may set up and contribute to an IRA even though Jenny has no earned income.
There is a key date relating to this feature, December 31. If you were married on December 31, the contribution is allowed. If you were divorced or legally separated on that date then the contribution would not be allowed.
After Death Rollovers
Steven passes away. Jenny may roll Steven’s IRA into her own IRA. All or any part of the assets that are held by Steven’s IRA. This transfer is not a taxable event. In addition, there is no time limit to take advantage of this feature.
Favorable Required Minimum Distribution (RMD)
If Jenny decides not to transfer the assets from Steven’s IRA and Jenny is under the age of 72, Jenny will have no RMDs. When Jenny reaches age 72, she will be required to take RMDs from Steven’s IRA. However, she may do so based on their Life Expectancy Table and not based on the age of the decedent. This is an advantage if Jenny is younger than Steven.
Q: What if I was married almost the full year? My divorce was not finalized until December 30.
A: Sorry, no contribution for you.
Q: My partner and I were married on December 30 so we were only married for one day that year. Can I rely on my spouse’s earned income to contribute to an IRA for the full year?
A: YES, plus you have until April 15th of the following year to make the IRA contribution.
Q: Does this rule apply to same-sex marriages?
A: Yes, legally married is legally married.
Q: My partner and I have lived together for 15 years. Do we get this advantage?
A: No, a civil union does not count for this feature, only married couples.
As you can see, there are a ton of benefits that come from Self Directing as a married couple. It’s not too late to take advantage of these benefits! Feel free to schedule a consultation or give us a call at 312-795-0988 and we are more than happy to answer any of your questions.
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