# Can personal RRSP funds be transferred into a spousal RRSP fund?



## Northern Bob (Feb 24, 2015)

Quite a few years ago my wife had contribution room for an RRSP, so I had her open one and contributed the limit. I also opened a spousal RRSP in her name and contributed to that as well. The company I work for has a deal with a company to manage the pension and RRSPs that gives access to good mutual funds for very low management fees. They allow a spousal RRSP to be included with my funds, but don't allow the spouse's personal RRSPs. Is it okay for my wife to transfer the individual RRSP funds into the spousal RRSP so it could be moved in? We wouldn't be withdrawing any funds for a while, though as I understand it as long as the funds have been in for several years there would be no penalty if we did? Thank you.


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## stardancer (Apr 26, 2009)

I doubt that she can transfer personal RRSP funds into a spousal RRSP to which you contribute. If the spousal RSP were not going under the umbrella of your company plan, she could have both the personal and spousal funds under one plan in her name (although that makes bookkeeping difficult and institutions don't like to do this).


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## OptsyEagle (Nov 29, 2009)

Most financial institutions will allow you to transfer personal RRSP money/assets to a spousal RRSP account, but not the other way around. The only real downside to doing this is that the spousal money will have a 3 year attribution rule on withdrawals. The 3 year attribution rule means that any withdrawals your wife makes, the tax cost will be attributed to you if you have made any contributions in the 3 years leading up to the withdrawal.


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## Eclectic12 (Oct 20, 2010)

This may be a "what the financial institution allows" limitation.

I did find on CRA's web site:


> Funds in an RRSP cannot be moved or transferred to an RRSP that does not have *the same annuitant* as the RRSP where the money is coming from. For example, you cannot transfer funds in your RRSP to a spousal or common-law partner RRSP.


http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/cntrbtng/spsl-eng.html

This suggests that personal RRSP to spousal RRSP would be okay as the annuitant is the same.

Trouble is the links I am finding are more around other types of transfers (ex. retiring allowance to RRSP, non-registered to RRSP etc.)

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/cntrbtng/spsl-eng.html
http://www.getsmarteraboutmoney.ca/...rement/Pages/RRSP-transfers.aspx#.VOygAC4gpyE




Northern Bob said:


> ... We wouldn't be withdrawing any funds for a while, though as I understand it as long as the funds have been in for several years there would be no penalty if we did?


As I understand it ... to avoid the spousal RRSP withdrawal being attributed back to the higher income earner, the lower income spouse has to wait two calendar years *after* the last contribution was made.
http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm
http://www.theglobeandmail.com/glob...awing-money-from-spousal-rrsps/article536063/


Cheers


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## OptsyEagle (Nov 29, 2009)

Eclectic12 said:


> As I understand it ... to avoid the spousal RRSP withdrawal being attributed back to the higher income earner, the lower income spouse has to wait two calendar years *after* the last contribution was made.


That is correct. So the reality is, this attribution rule will follow you forever, as long as you keep putting money into a spousal RRSP, as you have indicated you will be. What I mean by this, is right now it is in her name as a personal RRSP. 25 years from now, if you contributed to a spousal RRSP, the year before, you still will be liable for attribution of tax upon any withdraw. If you don't comingle them, she could take the money out right now or in 25 years, and the tax will be paid by her...or she could make a withdraw from the spousal RRSP and the tax will be paid by you.

Keeping them separate will allow you some tax flexibility now, and in the future. Just something to consider.


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## Northern Bob (Feb 24, 2015)

*Thank you*

Thank you for the great information and links. So she can transfer it into the spousal, but we have to wait two years from the last deposit before withdrawing without penalty. For some reason I thought we would be able to withdraw funds that had been in for years, just not funds that had been deposited recently. I'll have to think about how much time i have left to retirement.


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## gibor365 (Apr 1, 2011)

> For some reason I thought we would be able to withdraw funds that had been in for years, just not funds that had been deposited recently


 That's true.
If for example : contributor contributed to Spousal RRSP $5,000 5 years ago and $5,000 1 years ago,
If $5,000 were withdrawn , RRSP owner will pay taxes
If $6,000 were withdrawn , RRSP owner will pay taxes for first $5,000 and contributor for $1,000


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## OptsyEagle (Nov 29, 2009)

gibor said:


> That's true.
> If for example : contributor contributed to Spousal RRSP $5,000 5 years ago and $5,000 1 years ago,
> If $5,000 were withdrawn , RRSP owner will pay taxes
> If $6,000 were withdrawn , RRSP owner will pay taxes for first $5,000 and contributor for $1,000


That is not correct. 

If he contributed to a spousal RRSP within the withdrawal year or 2 years before the year of withdrawal, he will be required to pay the tax on any withdrawals, equal to or less then the amount of contributions made, during those 3 years.


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## gibor365 (Apr 1, 2011)

Why not? as per turbotax


> if your spouse withdraws funds within 3 calendar years of your contribution, that amount will be added to your taxable income in the year of the withdrawal.


 so they talking only about amount of contribution in last 3 tax years, if contribution was more than 3 years ago, not-contributor, but owner will pay taxes...
In my example first $5000 were contributed 5 years ago , why contributoe will pay taxes on it?


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## OptsyEagle (Nov 29, 2009)

gibor said:


> That's true.
> If for example : contributor contributed to Spousal RRSP $5,000 5 years ago and $5,000 1 years ago,
> If $5,000 were withdrawn , RRSP owner will pay taxes
> If $6,000 were withdrawn , RRSP owner will pay taxes for first $5,000 and contributor for $1,000


Sorry, it was your reply that his opinion was true that was possibly incorrect. Your example you gave is correct, but your reply to the OP, that his point was true, may be incorrect. 

I read his comment:


> For some reason I thought we would be able to withdraw funds that had been in for years, just not funds that had been deposited recently


that he was assuming that if he put money into the spousal RRSP many years ago, that he would be able to withdraw that amount, as long as he left enough money in the spousal RRSP, equal to the amounts of the recent contributions (3 years). This of course, is NOT true. However, it remains to be seen if that is exactly what he was actually asking or saying.

In any event, I think he probably knows by now that if he contributes money to the spousal RRSP in the 2 years before and in the year of a withdrawal, he is going to be responsible for some taxes, no matter when any other money might have been contributed.


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## gibor365 (Apr 1, 2011)

> that he was assuming that if he put money into the spousal RRSP many years ago, that he would be able to withdraw that amount, as long as he left enough money in the spousal RRSP, equal to the amounts of the recent contributions (3 years). This of course, is NOT true


Now you make me confused  Why it's not true?!



> he put money into the spousal RRSP many years ago


 lets assume he put $5000 5 years ago and he put $5000 2 years ago.
If now his wife (owner) withdraw $5000 (leaving $5000 = last 3 tax years contribution), she will pay taxes on this $5000.
but If now his wife (owner) withdraw $6000, she will pay taxes on this $5000 and contributor will pay taxes on $1000


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## Eclectic12 (Oct 20, 2010)

^^^^

He put in $5K less than 3 calendar years before the withdrawal occurred, which means the RRSP withdrawal will be included on *his* income tax return, not hers.



> If you make a contribution any time in 2013 [to a spousal RRSP], then your wife would have to wait until Jan. 1, 2016 to make a withdrawal without adverse tax consequences to you.


http://www.theglobeandmail.com/glob...awing-money-from-spousal-rrsps/article536063/


Or for CRA's example see:
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/wthdrwls/xmpl-eng.html

For CRA's example, the husband puts all in the money in over three years (2012 through 2014), where the husband contributes $1K to the spousal RRSP in 2014 - the same year as the wife, Keri withdraws $4K.



> ... Keri determines that Joshua has to include $4,000 in his income ... Keri does not include any amount in her income for this withdrawal.


Some of the $4K total that is to be reported on the husband's tax return is coming from the 2012 contribution, which is two years before the 2014 withdrawal.

Cheers


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## gibor365 (Apr 1, 2011)

Eclectic12 said:


> ^^^^
> 
> 
> Or for CRA's example see:
> ...


I've seen this example.... and it's poor example  ... they should've give example when there is also $2000 2011 contribution and "In 2014, Keri withdrew $6,000 " -> in this case: Joshua has to include $5,000 in his income on line 129 of his 2014 income tax 
and Keri $1,000


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## Eclectic12 (Oct 20, 2010)

+1.

If we amend their example in this way, T2205 "amounts from a Spousal or Common-law Partner RRSP, RRIF, or SPP to Include in Income for 2014", would then work out to $5K to report on Joshua's income and $1K to report on Keri's income.

http://www.cra-arc.gc.ca/E/pbg/tf/t2205/README.html

The formula is assuming that the spouse's contributions will be withdrawn first, regardless of any other contributions made five, ten or twenty years ago.


Cheers


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## OptsyEagle (Nov 29, 2009)

I think this is a lot less complicated then we or CRA are making it. 

The contributions/withdrawals are last in, first out. So if the withdrawals are from spousal contributions in the last 3 years, the contributor pays the tax and if they are from longer then 3 years, the owner pays the tax.

I am pretty sure we all know how it works, we are just having a hard time explaining it.


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## OhGreatGuru (May 24, 2009)

I think there are 2 questions here. Can a personal RRSP of a spouse be merged with his/her own spousal RRSP? This has been discussed on other threads, and the answer seems to be yes, CRA allows it, as well as most financial institutions. But the combined plan is essentially treated as a spousal RRSP. Otherwise it creates impossible tracking/reporting problems for the institution.

The second, separate, question is whether or not the employer's group plan in this specific case will allow transfer of the spouse's existing funds to their plan. That has to be sorted out with the employer or the group plan managers.


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## Northern Bob (Feb 24, 2015)

Thanks again for the explanations. Last in, first out is pretty clear. I'm afraid other than auto-contributing I haven't paid much attention to the RRSPs and savings, and neither did my wife. I asked her to pull out the last statements from her RRSPs and took a look for probably the first time. I had to open the letters, so she hadn't looked at them either. At some time I must have forgot I had opened a spousal for her or she misunderstood when I asked her to move some money in, because she has two of them in addition to her personal RRSP. I'm about to turn 57 so I thought I best get a grip on these things.


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