I max out my current workplace match for 401k and I’ve contributed my $6k backdoor Roth IRA. Should I open a Traditional IRA and backdoor Transfer to Roth IRA for my spouse before contributing to a brokerage account?
If you still would have income left over to invest after a spousal IRA definitely do it.
Should I open and fund the spousal IRA before opening and contributing to the brokerage account. I opened a traditional and roth IRA, as well as a brokerage account. I funded 2021 and 2022 IRA amounts to max the backdoor transfer to Roth IRA. Before I add a large sum to the brokerage account, should I open and fully fund a spousal IRA? Is that the best move?
Your spouse would have to open it.
I understand I’d have to open it with my spouse, in her name. I’m not asking about the logistics, I’m curious about the strategy. I was hoping Jeremy or someone from his team had some insight into the strategy of what to do first.
I appreciate you responding, but I don’t think you’re understanding my question. I already laid out how I’m following that checklist exactly. I’m curious if I should insert a spousal IRA before the brokerage account.
Not sure what part is unclear. A spousal IRA can be a traditional or a Roth. It juat means it is in your spouse’s name and they don’t have to have earned income.
As I said earlier, I would fund that before the brokerage. According to the checklist it would come before the brokerage.
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Thanks for your responses @Chadmethner !!
Yes, you should fund the spousal IRA first since the checklist is generally prioritized in order of what provides the biggest bang for your buck. And since a spousal IRA provides a tax break and a taxable brokerage account does not, the IRA would be the better deal!
Since you have one income, you can look at it in the sense that both of your checklists are combined into one while keeping each item on the same “level”. So for example:
- Your 401k match
- Spouse’s 401k match
- Your HSA
- Spouse’s HSA
- Your IRA
- Spousal IRA
etc.
Hope that helps!