# TRanfer Spousal RRSP to another RRSP



## victag (Jul 12, 2012)

My wife has contributed to spousal RRSP for me, but it is in an account I can not do much with at a credit union. I would like to transfer it to my non-spousal RRSP account at Questrade so I can have more investment options. Can I do this and if so, what are the implications and/or steps when filing taxes?


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## cardhu (May 26, 2009)

You can transfer RRSPs to another institution, but you can’t shake the spousal designation … once a spousal, always a spousal.

If the transfer is done directly from institution to institution (ie. assuming you do NOT withdraw from the credit union and redeposit it at Questrade), then there are no tax implications and there is nothing to you need to do at tax-time. A transfer is always initiated by the receiving institution, so call Questrade and tell them you want to transfer an existing RRSP to them … they’ll be more than happy to help.


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## victag (Jul 12, 2012)

Thanks, and I suspect then that if I do the transfer, my non-spousal RRSP will become a spousal. Is there any reason that would not be good for me?(any reason to prefer using RRSP over spousal RRSP)


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## OhGreatGuru (May 24, 2009)

In case Cardhu's answer wasn't absolutely clear, it would have to go into a separate account at Questrade. You can't combine it with your personal RRSP, because of the tax rules. (Actually, I seem to recall from an earlier thread that, theoretically, you can legally combine spousal and non-spousal RRSPs, but it creates an accounting nightmare. So it is not recommended and many institutions simply won't allow it.)


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## victag (Jul 12, 2012)

Interesting to know. Sadly, the spousal RRSP was setup inadvertantly in my name, on bad advice, costing us a loss of potential gains on our taxes last year...it should have been setup for my wife so that I could contribute (I am the higher income earner).


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## billiam (Aug 24, 2009)

You can combine a spousal and regular RRSP account into one account, the combined account is considered a spousal account for tax purposes. I have one with itrade formerly SMDI. Not exactly sure what the accounting nightmare is unless this is in reference to withdrawls from the account and possible attribution.


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## OhGreatGuru (May 24, 2009)

Yes, you have to keep track of attribution for withdrawals. And financial institutions will typically only issue one T4(RSP) for the account, so you will have to argue with CRA how withdrawals should be attributed.

Also, the amount that can be contributed is governed by the Contributors' contribution room (as distinct from the annuitant) for a spousal RRSP, but by the annuitant's contribution room for a personal RRSP (where annuitant & contributor are the same person) . So mixing them is another source of accounting problems, and possible disagreements with CRA.


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## OhGreatGuru (May 24, 2009)

victag said:


> Interesting to know. Sadly, the spousal RRSP was setup inadvertantly in my name, on bad advice, costing us a loss of potential gains on our taxes last year...it should have been setup for my wife so that I could contribute (I am the higher income earner).


I think you should try to get the financial institution to correct this mess first.


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## billiam (Aug 24, 2009)

OhGreatGuru said:


> Also, the amount that can be contributed is governed by the Contributors' contribution room (as distinct from the annuitant) for a spousal RRSP, but by the annuitant's contribution room for a personal RRSP (where annuitant & contributor are the same person) . So mixing them is another source of accounting problems, and possible disagreements with CRA.


Not so sure this is a problem if you have the right brokerage firm and keep your tax slips & brokerage statements. In my spousal with itrade (formerly SMDI) my wife can contribute as a regular contribution and I contribute as a spousal. Contribution slips for income tax come to the respective contributors so we can deduct what we each have contributed. The brokerage statement tracks contributions as Personal (regular) and Spousal on a yearly basis so we always have a reference point if needed in addition to our NOA's.


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## MoneyGal (Apr 24, 2009)

More exciting details on how to combine spousal and "regular" RRSPs, including a link to the ITA circular on this matter, and how to instruct your brokerage: http://www.taxtips.ca/rrsp/combinespousalrrsp.htm


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## cardhu (May 26, 2009)

A lot of misconceptions in such a short thread.



toolbox said:


> I seem to recall from an earlier thread …


Right ... as discussed in that earlier thread, there's nothing in the tax law that prohibits consolidating spousal and non-spousal RRSPs into a single account ... its not generally recommended, but the reason for that has nothing to do with “accounting nightmares” ... as I recall, in that earlier thread, it was you who raised the spectre of “accounting nightmare”, but as discussed in that same thread, no such accounting nightmare exists ... the accounting would in fact be simplified, not made worse.



> _you have to keep track of attribution for withdrawals._


Sure, but that is true of non-consolidated spousal RRSPs as well, and hardly constitutes a “nightmare” 



> _financial institutions will typically only issue one T4(RSP) for the account, so you will have to argue with CRA how withdrawals should be attributed._


Of course they’d only issue one T4-RSP ... only one person owns the RRSP ... which, again, is true of non-consolidated spousal RRSPs as well ... but what does that have to do with attribution? There would be no argument with CRA, the attribution rules are about as black-and-white as rules go, with not a shade of gray in sight. 



> _the amount that can be contributed is governed by the Contributors' contribution room (as distinct from the annuitant) for a spousal RRSP, but by the annuitant's contribution room for a personal RRSP (where annuitant & contributor are the same person) . So mixing them is another source of accounting problems, and possible disagreements with CRA._


This is wrong ... RRSP accounts do not have contribution limits ... people do ... so if Mary has $20k contribution limit, and Bill has $15k contribution limit, then they can contribute $35k between them ... there is no possibility of a disagreement with CRA over this, since deduction limits are clearly stated on Notices of Assessment, and aside from making sure that contribution receipts indicate the correct contributor, not really any possibility of accounting problems, either. 

Several of these misconceptions seem to arise out of the belief that an RRSP can simultaneously be spousal and not-spousal ... that is an impossibility ... a spousal RRSP is a spousal RRSP, and is subject to the rules for spousal RRSPs, period, full stop ... the potential accounting nightmares and disputes with CRA refered to do not exist.


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## cardhu (May 26, 2009)

victag said:


> Thanks, and I suspect then that if I do the transfer, my non-spousal RRSP will become a spousal. Is there any reason that would not be good for me?(any reason to prefer using RRSP over spousal RRSP)


Assuming Questrade were willing to accept the transfer (they could refuse*, even though its perfectly legal), then yes, your individual RRSP would become a spousal, and it would stay that way forever .... it is not generally recommended because you’re adding restrictions that otherwise don’t exist ... but if those restrictions are not likely to ever impact you, then it may not be a serious downside, if the convenience of having everything in one account is that important to you ... if your wife will never make another contribution to that account for as long as she lives, then as of January 1, 2014 (assuming her spousal contribution was made in 2011), you need no longer worry about attribution. Personally I wouldn’t do it over a few thousand dollars, but that’s me. 

* administratively, it is easier for a financial institution to transfer an individual RRSP into an existing spousal RRSP, than it is to transfer a spousal RRSP into an existing individual RRSP ... under the tax law, it doesn’t make any difference either way, but the latter produces more administrative headache ... for this reason, Questrade might insist that you open a new, separate, spousal RRSP to accept the transfer from the credit union, and then subsequently transfer the contents of the existing individual account into the new spousal account. 



victag said:


> Sadly, the spousal RRSP was setup inadvertantly in my name, on bad advice, costing us a loss of potential gains on our taxes last year...it should have been setup for my wife so that I could contribute (I am the higher income earner).


Oops ... that’s unfortunate ... but what do you mean by _“loss of potential gains on your taxes last year”_? ... tax breaks are not “gains” and whatever tax deduction you didn’t use last year you can carry forward into the future, so it doesn’t seem as if anything was “lost”. 

Even though a consolidation is legal and possible, it may not be the best course of action available to you, going forward. Your options vary, depending on the answers to the following ... 


Has your wife taken the deduction yet, for the spousal contribution? 
Is your wife making RRSP contributions to her own account, or will she in the future? 
If NO to the first question, then she may be able to reverse the contribution, without tax consequence, by filing a T3012 form. You could then turn around and redeposit those same funds into a proper spousal RRSP, in which your wife is the annuitant. There is a time limit for doing this, but if she made her spousal contributions in 2011, then you’ve got lots of time. 

If YES to the first question, then reversal is off the table, but you may still be able to shift the funds into a proper spousal RRSP in her name ... you can’t do this via a transfer, of course, but you could do by withdrawing the funds, then turning around and recontributing the funds into the correct account. There would be tax consequences in this case, including a withholding, but if the attribution period hasn’t yet passed, then the withdrawal would be taxed in your wife's hands, and the recontribution would be deducted from your income. You’d have to do some figuring to determine whether this makes sense in your case. 

Note that in the withdraw/recontribute scenario, the contribution room that your wife used in making the original erroneous contribution would be lost forever, and that is where your answer to the second question comes into play. Despite the fact that the vast majority of RRSP contribution room ever created is still sitting around unused, and despite the fact that many so people bellyache about perceived shortcomings of RRSPs, that contribution room is a very valuable commodity and should not be squandered lightly.


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## OhGreatGuru (May 24, 2009)

cardhu said:


> A lot of misconceptions in such a short thread.
> 
> ...


OTOH we routinely receive inquiries from people who don't understand what a spousal RRSP is, or how it differs from a regular RRSP; who overcontribute to their RRSP; who "inadvertantly" set up the wrong kind of RRSP; etc. So I stand by advice that most people should keep spousal RRSPs separate for the sake of simplicity.


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