# spousal rsp for at-home mom



## joncnca (Jul 12, 2009)

we're expecting in january, and my wife will likely be staying home with the child for the next 2-3 years at least. we have a good 30+ years before retirement, but i want to plan ahead.

because my wife will stop working, i've been thinking about spousal rsps lately. she's had a pension for longer than me, which ate up most of her rsp contribution room. i, however, have some $20,000 in unused contribution room. she also has some money in cash and non-registered accounts. 

i'm wondering if this is possible and/or prudent:

in addition to my own contributions to her spousal rsp, can she gift me a lump sum that i then contribute to her spousal rsp? this uses up some of my rsp contribution room, but she gets more money in her spousal rsp, and i get a tax refund that we can use for whatever purpose (probably baby, i hear those are expensive). her money has already been taxed, so gifting it to me should not invoke income tax.

so like i said, is this possible and/or prudent?

thanks!


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## OptsyEagle (Nov 29, 2009)

Rule of thumb #1 is to put the contribution money into the person's name who has the least amount of retirement assets, in an attempt to even up these amounts which may reduce the taxes upon withdrawal in retirement.

Rule of thumb #2, is that the person in the highest income/tax bracket should take the deduction on their tax return.

So, if rule #1 says the money should go into your wife's RRSP and Rule #2 says that you should take the tax deduction then you should set up a spousal RRSP, to do this. 

Now all that being said. If your wife has more pension benefits then you, it would seem to me that rule #1 says the money should be contributed to your RRSP, to even these assets up some more. Of course rule #2 says you should take the deduction. So here we are talking about a simple personal RRSP in your name. 

Also, since the pension income splitting rules were implemented by CRA, the rule #1, geared towards retirement income splitting, is not as important anymore, since it can now be done at tax time. The only benefit of a spousal RRSP is that any RRSP money removed before age 65 is not eligible for pension income splitting. So the spousal RRSP can still play a role, but it is not as important today as it use to be.


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## joncnca (Jul 12, 2009)

thanks, OptsyEagle =)

due to some employment changes, i should also have a pension at retirement. since i don't intend on interrupting my employment, i will likely also have a higher pension than my wife. so i will be setting up a spousal rsp, despite whatever diminished benefit there may be now compared with the past. i think i'm mostly interested in the tax implications of making contributions received from my wife. perhaps i'll also try posting in the taxation forum.

thanks


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