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Spousal RRSPs

Tax deduction today. Tax reduction tomorrow.

While a spousal RRSP is registered in your spouse's name, as the contributor, you still get the full benefit of the tax reduction.

Spousal RRSPs are also great building blocks for future income splitting. The best scenario would be if you have a significant amount of retirement income while your spouse has little. A spousal RRSP can help ensure you and your spouse have equal amounts of assets in your individual RRSP portfolios upon retirement, evening out your incomes – and your taxes.

How much can I contribute to a spousal RRSP?

Deposits made to a spousal RRSP can't exceed your personal contribution limit. Contributions can be made to a spousal RRSP, your personal RRSP or split between the two. Deposits made to a spousal RRSP don't affect your spouse's RRSP contribution limit for the year.

Spousal RRSP benefits

  • Minimizes the tax paid on your savings when you retire.
  • Spousal contributions don’t decrease your spouse's contribution limit.
  • You receive the tax deduction while your spouse benefits from the contribution.
  • Convenient way of income splitting and possibly saving thousands of dollars in taxes each year during retirement.
  • If the contributing spouse still earns eligible income after the age of 71, they can still contribute to a spousal RRSP as long as their spouse is younger than 71.
  • The higher-earning spouse can funnel contributions into the spousal RRSP to help equalize income streams at retirement.

Some strategic considerations

Many people assume that spousal RRSP contributions should always be made by the higher-income spouse. But in some situations, that's not the best strategy. Here are some examples of scenarios that could affect your spousal RRSP decisions:

  • You earn more income, but your spouse has an excellent pension plan and you have no pension plan.
  • You earn more income, but your spouse has received, or expects to receive, a large inheritance that can be put away for retirement.
  • Your spouse earns more income, but your RRSP is much larger because you started investing earlier, made larger and more regular contributions, and earned higher investment returns.
  • Your spouse earns more income, but plans to take time off for raising children, education, or some other purpose.

Spousal RRSP attribution rules

The Income Tax Act includes attribution rules to prevent abuse of spousal RRSPs. If you make a contribution to a spousal RRSP, your spouse must wait three calendar years before they can withdraw funds without the income being taxed or “attributed” to you. If a withdrawal is made earlier, the maximum income attributed back to you is the lesser of the amount withdrawn and the total contributions you made in that year and the two preceding years.

Talk to your financial advisor today to see if a Spousal RRSP makes sense for your retirement plan.

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