Can Couples Combine Their Retirement Accounts?
You may be a couple entering your golden years or a soon-to-be-wed.
Regardless of how old or long you’re in a marriage, you’ll talk about retirement at one point or another. And one aspect of retirement you may have discussed with your spouse is if it is possible to combine your retirement accounts.
After all, if you’re 100% sure that you’ll be together during your twilight years, both of you must ensure that you’ll be financially secure.
Unfortunately, you can’t have a joint retirement account. After all, most retirement accounts are individual retirement accounts (IRAs).
And even though there are more than ten types of retirement accounts, there’s no possibility that you can combine or merge yours with another person’s, even if that individual is your spouse.
However, there are other ways you and your spouse can combine your retirement funds or accounts. Some of those ways are the following.
Create A Joint Checking Account
A 401k account is very convenient. Primarily, it will take care of itself until it’s ripe for the picking. Unfortunately, there’s no such thing as a 401k joint account.
After all, employers often handle these accounts for you—help you make contributions for you, to be precise—and it would be messy if two people owned the account.
Since that’s not possible, your best option is to create a joint checking account with your partner and tag it as your retirement funds.
Another option is to get a precious metals IRA or additional IRAs to diversify your portfolio.
Name Your Spouse As A Beneficiary To Your Retirement Account
While it’s not combining your retirement accounts, naming your spouse as a beneficiary of your retirement account will give them access to your funds in case of hardship or your death. On a side note, you can list anyone as a beneficiary aside from your spouse.
Note that all your retirement money will go to your beneficiary after death. Another thing, the beneficiary’s 401k will absorb or receive the ‘rollover’ of your account when you pass.
This makes it a legitimate way to combine your account, which can be a sad thing to think about.
Of course, since you’re only listing a beneficiary, remember that the person you’ll nominate won’t be able to contribute to the account.
While it’s not entirely up to you, your spouse should do the same for you—list you as a beneficiary if you’re gunning to secure each other’s futures.
Withdraw Your Money And Transfer It To Your Spouse’s Account
Rolling over a retirement account is only possible if both accounts are yours or you have listed a beneficiary and passed away.
However, there’s still a way to get your money and ‘combine’ it with your spouse’s retirement fund. And that is through withdrawing your money from your IRA and depositing it in your spouse’s.
If necessary, you should take this option, especially if you’re already preparing for retirement. Remember that if you withdraw your money prematurely—say you’re still below 59½ years old—the money you’ll get can be taxed and receive a hefty penalty.
Get A Spousal IRA
As good as a spousal IRA sounds, it isn’t a combined or joint retirement account. A spousal IRA allows a person to create a retirement account for their partner, to which that person can contribute.
Typically, this is a good option if you or your spouse is in a low-income bracket or unemployed, which prevents you or them from making significant contributions to an IRA.
Accept That Separate Retirement Accounts Are A Good Thing
Even if your love is true and pure and you know that you will be with your spouse forever, there are still risks in having combined retirement accounts if they are permitted.
First—the obvious one—there’s still a chance you might get divorced or separated. Note: around 40% to 50% of married couples in the country end up in divorce.
It’s sad to say, but the probability of your marriage lasting till your deathbed is the same as a coin flip. Combining retirement accounts and then divorcing later can be a huge financial issue.
Second, you have the option to put your spouse as a beneficiary. This is a more favorable option for both of you as this setup can secure both of you better.
Third, the who’s who when it comes to contributions can spark problems between you and your partner. You would rather want the two of you to pay for yourselves rather than share a ‘bill.’
Conclusion
Sadly, you can’t have a combined retirement account with your spouse. These retirement accounts are called IRAs for a reason. Nonetheless, it doesn’t mean that there is no way for you two to save together for retirement. Above are a few of the ways you can do that.