Spousal RRSPs: Timing matters - MoneySense

Spousal RRSPs: Timing matters

For some couples, having a spousal RRSP may be the way to go. Check out how to use them effectively.


A spousal RRSP is a private retirement plan to which one partner (often the higher income earner) contributes for the other.  The taxman recognizes common-law and same-sex relationships for the purposes of contributing to an RRSP.

One of the most important points to understand about a spousal RRSP is that the plan belongs to the plan’s owner—the person in whose name the plan is registered to —not to the person who made the contributions.  Only the plan owner can make investment decisions or withdrawals from the plan, but only the contributor gets the deduction.

You can contribute as much as you want to a spousal RRSP for your mate, as long as you don’t go over your own contribution limit for the year. If you had a contribution limit of $10,000, you could put the whole $10K in a spousal RRSP. Or you could put $4,000 in a Spousal plan and keep the other $6,000 for your own RRSP. You can divvy up the money in any way that works best for you and your mate.

Just because you make a contribution to a spousal RRSP for your mate, doesn’t mean your partner can’t make a contribution to his or her own plan. Since your spouse’s contribution would be based on your spouse’s income, the spousal RRSP doesn’t affect the individual RRSP contribution limit in any way.

However, it does matter when you make the spousal RRSP contribution.  Spousal RRSP withdrawal rules are based on “calendar” years. Make a contribution for 2012 by December 2012 and then no further contributions, and you’ll be able to withdraw money attributed only to the plan holder as soon as January 2015. Make that contribution within the first 60 days of 2013, and you’ll have to wait until January 2016 before withdrawals are taxed solely in the plan holder’s hands.

While it’s pretty typical for higher income earners to contribute to spousal RRSPs for lower income partners, that’s not always the case. If you have an excellent pension plan and your better half doesn’t, it may make sense to give your entitled RRSP contribution to your partner’s spousal RRSP.

Also, think about using a spousal RRSP if your partner earns more, but your RRSP is much larger because you started investing earlier or made larger contributions. Ditto if your partner earns more now, but plans to take time off to raise kids or return to school.

Whatever you do, DON’T mix individual RRSPs with spousal plans. The taxman hates that and will treat the whole plan as a spousal one.