Spousal RRSP

A Spousal RRSP is a variation of an RRSP designed to facilitate income splitting in retirement. The contributing spouse receives the tax deduction, while the annuitant spouse owns the plan and is generally taxed on withdrawals, subject to attribution rules if withdrawals occur too soon after contributions. This strategy helps couples balance retirement income, potentially reducing their combined tax liability. Spousal RRSPs are particularly useful when there is a significant difference in spouses’ incomes.

Why Spousal RRSP

• Contributions are deductible to the higher-income spouse

• Retirement income may be taxed in the lower-income spouse’s hands

• Helps equalize retirement savings between spouses

• Useful where there is a significant income disparity

• Subject to attribution rules, which must be managed carefully

Key Features

• Contributions are made by the higher-income spouse

• Contributions are tax-deductible to the contributor

• The lower-income spouse is the annuitant and owner

• Withdrawals may be subject to attribution rules

Objective

• To allow couples to achieve income splitting in retirement and reduce their overall family tax burden.

Best For

• Couples with a large income disparity

• Families focused on retirement tax efficiency

Who Can Open

• Married or common-law couples

• The contributing spouse must have RRSP room