A spousal RRSP is a retirement savings plan registered in the name of your spouse including common-law and you make contributions based on your income.

In the case that your spouse’s income will be lower than your own during retirement,making your annual contributions into a spousal plan is an effective way of income splitting for tax purposes.

Whatever amount you are eligible to contribute to your own RRSP plan, can be contributed to a spousal RRSP instead.  The amount that is contributed to the spousal RRSP, the contributor gets to personally claim the tax deduction.  The contributions you make to the spousal RRSP will not affect your spouse’s ability to contribute to his/her own RRSP up to his/her yearly limit.

Because a high-income earning spouse can contribute and have funds immediately withdrawn and taxed to the lower-income spouse, an “anti-avoidance” provision is attached to the spousal plans.

This provision states that any amounts withdrawn from a spousal RRSP plan are to be taxable to the contributor if the contributions have been made in the year of the withdrawal or the two previous calendar years.

{*This is a three year withdrawal rule and it does not apply to a spouse withdrawing funds while a separation or a marriage breakdown.*}  

Once your spouse reaches retirement, all the funds from the spousal RRSP must be transferred to a spousal RRIF for tax purposes.  Any amounts that are withdrawn beyond the annual minimum are subject to the three year withdrawal rule.

 

 

*Molchan Financial is committed to helping you and your family achieve your financial goals.
We are obligated to inform you that the product descriptions and information that follow are intended for educational purposes only and are not to be considered as a solicitation to purchase any security.

Commissions, trailing commission, management fees, and expenses all may be associated with segregated or mutual fund investments. Please read the prospectus before investing. Segregated and Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. To obtain a prospectus, or further information, please contact our office.  Our Web Pages are under constant revision and subject to change without notice. Due to the dynamic nature of the Segregated and Mutual fund industry, we can make no guarantee as to the accuracy of the information presented.

The information contained herein is for personal use only. Redistribution of this information is prohibited without written permission.

Password Reset

Please enter your e-mail address. You will receive a new password via e-mail.