Spousal RRSPs: still useful?

How a spousal RRSP works.

If you are married or have a common-law partner, you can contribute to a spousal RRSP for your partner and claim the tax deduction. However, your total contributions to your own plan and your partner’s can’t exceed your allowable maximum contribution.

Once contributed, the money in the spousal RRSP belongs to your partner. As long as spousal money isn’t withdrawn in the same year or next two years, it is treated (taxed) as your partner’s income when withdrawn.

Since spousal RRSPs let you put assets into your spouse’s name and eventually have withdrawals taxed in their name, they can help equalize your incomes in retirement. That’s a big step towards your family paying the least possible income tax in retirem

Meet with us to open a spousal RRSP.

Alternative to spousal RRSP.

Pension Income Splitting can be filed with the CRA and lets you share up to 50% of eligible sources of retirement income (such as RRIF, or pension or annuity income) with your spouse. You can choose whether to split any income and, if so, how much to split, when you both file your taxes each year. Since these rules are so flexible, some people wonder if spousal RRSPs are still relevant.

Spousal RRSP benefits and if it’s right for you.

You get the same immediate tax benefit as contributing to your own RRSP as a spousal RRSP. And with the new pension income splitting rules, you can share up to 50% of your RRIF income with your spouse. So why bother with spousal RRSPs anymore?

There’s at least 2 good reasons to still consider spousal RRSPs.