After December of the year you turn 71 years old, you can contribute up to your RRSP deduction limit to a spousal or common-law partner RRSP if your spouse or common-law partner is 71 or younger on December 31 of the year you make the contribution.
For more information, see Contributing to your spouse's or common-law partner's RRSPs.
Drawbacks of Spousal RRSP Contributions
The three-year attribution rule puts a time limit on when you'll be able to use the funds and if you withdraw funds within this window, the taxes you'll owe on the withdrawal can become expensive.
The difference between a spousal RRSP and a personal RRSP is that, with a spousal RRSP, one spouse is the annuitant (the plan holder or owner of the RRSP), while the other spouse (or common-law partner) is the contributor to the plan.
What is an example of a spousal RRSP attribution? ›For example, let's say your spouse contributed $3,000 to your spousal RRSP within the three-year attribution period. You withdraw $5,000 during those three years. In this case, they'll be taxed on the $3,000, and you'll be taxed on the remaining $2,000.
Who claims a spousal RRSP contribution? ›The spousal RRSP is registered under the name of the spouse making the lower income (also known as the annuitant) and the plan is theirs. This person makes the investment decisions and is the only one allowed to withdraw money.
Who is the beneficiary of a spousal RRSP? ›the spouse or common-law partner is designated in the RRSP contract or the deceased annuitant's will as the sole beneficiary of the RRSP.
Who should not invest in RRSP? ›In the case of a spousal RRSP, however, your wife's early withdrawal is added to your taxable income, not theirs. This presents a case where you face the risk of losing any tax advantages from the spousal plan. Early withdrawals include the current year and three preceding years.
Can someone over 71 contribute to a spousal RRSP? ›Although you cannot contribute to your RRSP after December of the year you turn 71 years old, you can still contribute to your spouse's or common-law partner's RRSP until the December of the year that they turn 71.
What happens to a spousal RRSP upon death of contributor? ›Spouse or common-law partner
If the surviving spouse or partner is under age 71, the RRSP or RRIF can be transferred to the survivor's RRSP; otherwise, the assets must be transferred to the survivor's RRIF or eligible annuity.
One key advantage of a Spousal RRSP lies in the ability to split retirement income between spouses. Because of Canada's graduated income tax system, when one spouse or common-law partner has a higher income than the other, the higher-earning individual usually pays tax on their earnings at a higher rate.
With a spousal RRSP, your spouse or common-law partner becomes the annuitant (the owner) of the account. They make investment decisions for the account and can withdraw funds from the account at any time. You can contribute to a spousal RRSP, but only the annuitant can make withdrawals from it.
Can I combine my RRSP and spousal RRSP? ›Expert Answer: Yes it is possible to combine a spousal plan and an individual plan, as long as both plans have the same annuitant. However, when the two plans are combined, the combined plan will be considered a spousal plan.
What is the difference between RRSP and spousal RRSP? ›A spousal RRSP is an RRSP that's opened by your spouse but you contribute to it. Your contributions are based on your contribution limit and you claim the tax deduction.
Can a spousal RRSP be used for HBP? ›Your spouse can participate in the HBP by withdrawing from a spousal RRSP, assuming all of the criteria discussed above are met. You generally cannot make a HBP withdrawal from locked-in RRSPs, group RRSPs or Pooled Registered Pension Plans.
When can you remove money from RRSP? ›When can I withdraw from my RRSP? You can make a withdrawal from your RRSP any time1 as long as your funds are not in a locked-in plan. The withdrawal, however, is subject to withholding tax and the amount also needs to be included as income when filing your taxes.
Does a spousal RRSP have to be converted to a spousal RRIF? ›All RRSPs (including spousal RRSPs) must mature by December 31 of the year you turn 71. Before that time, you have to either transfer your RRSP to a registered retirement income fund (RRIF), use the funds to purchase an eligible annuity or withdraw your RRSP funds in cash or in-kind.
What is the disadvantage of a RRSP? ›Limitations and Considerations for Investors
Flexibility Concerns: RRSPs lack liquidity. Early withdrawals can lead to significant tax penalties, except under specific conditions like the Home Buyers' Plan and Lifelong Learning Plan.
Convert your RRSP to a RRIF
Once you convert to a RRIF, you can start receiving payments from it. The CRA sets the minimum amount you must withdraw based on your age and a percentage of the market value of the RRIF. All money withdrawn from a registered account is fully taxable in the year you withdrawn it.
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