There’s still time to lower your 2023 tax bill or boost your refund with a lesser-known retirement savings strategy for married couples.

One requirement for individual retirement account contributions is “earned income,” such as wages or salary from a job or self-employment earnings. But there’s an exception for single-income households: the spousal IRA.

A spousal IRA is a separate Roth or traditional IRA for the non-working spouse — and it’s “often overlooked,” according to certified financial planner Judy Brown at SC&H Group in the Washington, D.C., and Baltimore area.

These accounts can provide a current-year tax break and boost retirement savings for nonearning spouses. As of 2021, some 18% of parents didn’t work outside of the home and most stay-at-home parents were women, according to Pew Research Center.

“My advice to [nonearning] women would be make sure you’re at least doing that spousal IRA,” said Boston-based CFP Catherine Valega, founder of Green Bee Advisory.

Married couples who file jointly have until the federal tax deadline — April 15 for most taxpayers — to make 2023 IRA contributions for each spouse, assuming there’s enough earned income for the combined deposits.

Traditional pretax spousal IRA contributions can provide a 2023 tax break, depending on income and workplace retirement plan participation, explained Brown, who is also a certified public accountant.  

With income phaseouts for IRA deductibility and Roth IRA contributions, many wait until March or April for the previous year’s IRA deposits. It can be a “game-time decision” while doing your taxes, Brown said. 

The annual IRA contribution limit is $6,500 for 2023 or $7,500 for savers age 50 and older. The limit increased to $7,000 for 2024, with an extra $1,000 for investors age 50 and up.

However, “it doesn’t have to be all or nothing,” Brown said. Even a $500 or $1,000 spousal IRA contribution could provide tax savings.

Plus, too much pretax retirement savings could create a “tax problem” in the future, depending on the size of your accounts and future required minimum distributions, Mattia said. Pretax withdrawals boost income, which can affect Medicare Part B and Part D premiums, among other consequences.

“It’s a puzzle and really depends on a lot of things,” she added.