IRS Rules for an IRA Transfer to a Spouse

by Gregory Hamel

Individual retirement accounts let you save money on a tax deductible basis and put off taxes on investments until retirement, but they also limit how and when you can access your money. IRAs are strictly personal accounts, so you generally cannot transfer an IRA to someone else, even your spouse. It is possible, however, to transfer an IRA to a spouse in certain special situations, and couples can each have their own separate IRAs.

IRA Ownership Basics

An IRA can only be set up in the name of one person. Spouses cannot share a single IRA through joint ownership and you can't transfer an IRA directly to your spouse. The only way you can give IRA assets to someone else outside of divorce or death is by withdrawing money from your account: You can't transfer the account itself. Withdrawals from IRAs may be subject to income tax and if you take money out before age 59 1/2, you may face a 10 percent early withdrawal penalty.

Transfers Due To Divorce

The transfer of an IRA to a spouse is possible in the case of divorce or legal separation. A decree of divorce or separate maintenance made by a court may involve the transfer of interest in an IRA from one spouse to another. When this occurs, the spouse receiving the IRA can take ownership of the account by transferring money into a new or existing IRA or changing the name on the account.

Transfers After Death

If you pass away before you take all the money out of your IRA, your account passes to the account's beneficiary. You can designate a beneficiary for an IRA when you first open it and you can change your beneficiaries at any time. A spouse named as a beneficiary can treat an inherited account as a personal account by changing the name on the account or transferring money into a new or existing IRA.

Spousal IRAs

While you can't share an IRA with a spouse or transfer an IRA outside of divorce or death, you and your spouse can each have your own separate IRAs. If you file a joint tax return, your income counts as taxable compensation for you and your spouse. This means you can contribute to an IRA on behalf of your spouse, even if your spouse does not earn any income.

About the Author

Gregory Hamel has been a writer since September 2008 and has also authored three novels. He has a Bachelor of Arts in economics from St. Olaf College. Hamel maintains a blog focused on massive open online courses and computer programming.

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