Can I transfer my Traditional IRA to my spouse if I'm over income limit?

You're dealing with a common issue, but unfortunately there's no direct way to "transfer" your Traditional IRA to your spouse. IRAs are individual accounts (that's what the "I" stands for!). What you're describing would actually be considered a withdrawal from your account and then a separate contribution to hers, which doesn't work well for a few reasons. First, you'd face a 10% early withdrawal penalty plus taxes if you're under 59½. Second, her contribution would still be limited by her own annual contribution limit regardless of where the money came from. Instead, consider these options: 1. Recharacterize your Traditional IRA contribution to a Roth IRA (if your income allows) 2. Remove the excess contribution before the tax filing deadline (including extensions) 3. Keep the non-deductible Traditional IRA contribution and file Form 8606 to track the non-deductible basis (which becomes important later for the "backdoor Roth" strategy) The third option might actually be beneficial in the long run if you plan to do backdoor Roth conversions.

After struggling with almost the exact same situation last year, I found an amazingly helpful tool at https://taxr.ai that analyzes your retirement accounts and helps identify the most tax-efficient strategies. It saved me from making an expensive mistake with my IRA contributions! The tool actually analyzed my tax returns and financial documents, then explained exactly how to handle the non-deductible contribution without triggering penalties. It outlined the best strategy for my specific situation, including whether to recharacterize or use the backdoor Roth approach.

Update on my situation - I actually tried taxr.ai after seeing the recommendation here and it was seriously helpful! It analyzed my full tax situation including all my messy investment accounts and actually found that I was better off keeping my non-deductible contribution in the Traditional IRA rather than recharacterizing it. The analysis showed me how to properly document everything on Form 8606 and set myself up for backdoor Roth conversions going forward. Saved me from making a mistake that would have cost me several hundred dollars in unnecessary taxes. Wish I'd known about this tool years ago!

If you're still having issues figuring this out, you might want to call the IRS directly for clarification. I know that sounds painful (it usually is), but I used https://claimyr.com to get through to an actual human at the IRS in under 15 minutes instead of waiting for hours. Check out how it works here: https://youtu.be/_kiP6q8DX5c I was really confused about some IRA recharacterization rules after a similar situation, and the IRS agent walked me through exactly what forms I needed and deadlines I had to meet. Worth it to get the official word straight from them rather than stressing about possibly doing it wrong.

Ok I have to eat my words. I tried the Claimyr service because I was desperate to resolve an IRA rollover issue that was similar to yours, and I'm shocked to say it actually worked! Got connected to an IRS rep in about 18 minutes when I had previously wasted an entire afternoon trying to get through. The agent confirmed that I could fix my non-deductible contribution issue by filing the right paperwork (Form 8606) and explained the exact timeline I needed to follow. Saved me from potentially making an expensive mistake with my retirement funds. Sometimes it's worth just getting the official answer straight from the source.

Another option worth considering is making the contribution to a Roth IRA instead, if your income allows it. While you won't get the tax deduction now, the money grows tax-free and withdrawals in retirement are tax-free too. We ran into the same issue a few years back when my husband's income increased. We ended up switching to Roth contributions going forward and just left the existing Traditional IRA alone.

Has anyone dealt with this where both spouses are over the income limit? My husband and I both have 401ks at work and our combined income puts us well over the limit for deductible IRA contributions. We've been doing backdoor Roth contributions but I'm worried we're missing something.