Avoiding the “procrastination penalty” | Vanguard

It takes 2

You know the importance of making contributions to your IRA (and doing so early). But did you know you can contribute to an IRA on behalf of a nonworking spouse? This is a great way to boost your retirement savings as a couple.

Generally, individuals without earned income aren’t eligible to contribute to tax-advantaged retirement accounts, like IRAs. But if you’re married and file jointly, you can contribute to an IRA on behalf of your spouse whether or not they received compensation for the year.

The passing of the Setting Every Community Up for Retirement Enhancement (SECURE) Act in December of 2019 offered yet another advantage. In the past, you could only contribute to a traditional IRA until you reached age 70½. But the SECURE Act removed that limitation. In other words, even if your spouse is over age 70½, or retired, you can still make contributions on their behalf provided you have earned income for the year.

You can read more about Vanguard IRAs, including contribution limits, eligibility, and tax deductibility, here.

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