# Need to make sure I understand Spousal RRSP.



## recklessrick (Jun 16, 2013)

Sorry if this is dumb but I need to make sure I have this straight.

I work, my wife stays at home with the kids. We are ready to start our RRSP investing and I need to confirm that for the income splitting of a spousal RRSP, the spousal RRSP must be in her name. Correct? 

So if I open a personal RRSP account at td Waterhouse, she would open an RRSP *and* a spousal RRSP. I'd then be able to pass some of my income along to her by investing in that spousal RRSP and reducing my taxable income. Up to my max annual RRSP limit of course.

Do I have that right? We just aren't sure which one of us would need the spousal RRSP for me to income split.

Thanks


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## MoneyGal (Apr 24, 2009)

She doesn't need to open an RRSP (no earned income, so no contribution room, anyways, right?)

You open an RRSP, and YOU open a spousal RRSP for which she is the owner and the annuitant (the person who takes the withdrawals), and you are the contributor.


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## MorningCoffee (May 8, 2013)

My husband just opened a spousal for me. It may differ with different banks, but I had to be there and I essentially had to open the account. Since I'm the owner, I had to provide my personal/income info as well as my risk tolerance. My husband, as contributor, only had to provide his SIN, ID and signature. 

Now that's it's open, I am the only one who can control it. It's my account, but hubby gets the tax break.


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## Eclectic12 (Oct 20, 2010)

MorningCoffee said:


> ... Now that's it's open, I am the only one who can control it. It's my account, but hubby gets the tax break.


True .... though it also is important to know that if there is a withdrawal where there has been a contribution in less than three calendar years - the tax break will be re-adjusted.

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


Cheers


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## recklessrick (Jun 16, 2013)

MoneyGal said:


> She doesn't need to open an RRSP (no earned income, so no contribution room, anyways, right?)
> 
> You open an RRSP, and YOU open a spousal RRSP for which she is the owner and the annuitant (the person who takes the withdrawals), and you are the contributor.


So at td Waterhouse right now, I have the application for a personal RRSP and a spousal RRSP with my wife's name attached to it... That should be what I need then, right? They just asked for her sin and dob, no signature or anything. That way I can contribute into that spousal RRSP using her contribution room and I get the tax break. Sound right?


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## MoneyGal (Apr 24, 2009)

Sounds right except for ONE thing: You use YOUR contribution room...not hers. It's a formal way for you to give her money using your contribution room and you get the tax deduction.


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## recklessrick (Jun 16, 2013)

MoneyGal said:


> Sounds right except for ONE thing: You use YOUR contribution room...not hers. It's a formal way for you to give her money using your contribution room and you get the tax deduction.


Got that, it goes against my room, not hers. I'd still want to max out my personal room before spousal though, right?


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## Spudd (Oct 11, 2011)

You can't max out your personal room before spousal. Let's say your RRSP contribution limit is $10,000. If you max out your personal RRSP by contributing $10,000, then you will have $0 of spousal contribution room. 

The idea is to contribute to the two RRSP's such that when you withdraw in retirement, you can withdraw a similar amount from each RRSP and therefore lower your overall household taxes paid.


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## recklessrick (Jun 16, 2013)

Spudd said:


> You can't max out your personal room before spousal. Let's say your RRSP contribution limit is $10,000. If you max out your personal RRSP by contributing $10,000, then you will have $0 of spousal contribution room.
> 
> The idea is to contribute to the two RRSP's such that when you withdraw in retirement, you can withdraw a similar amount from each RRSP and therefore lower your overall household taxes paid.


So I have nearly 50000 room in my name and my wife has 27000 for RRSP room. I'd want to fill mine up, however long that takes, and then use her room as well. This has two benefits where I get more RRSP room by using hers and we can split the income down the road when we retire, like you said. Thinking have it?


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## MoneyGal (Apr 24, 2009)

Well...it makes no difference to your tax deduction...the "normal" purpose for a spousal RRSP is to equalize the pools of money from which spouses can draw in retirement. So if your spouse has a smaller RRSP than you do, one way to go is to put all your contributions in her spousal RRSP until you have similarly-sized accounts. Make sense?


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## MoneyGal (Apr 24, 2009)

It took me too long to type the message i just posted and several messages came in between!

Rick: you still don't understand spousal RRSPs. *A spousal RRSP uses YOUR contribution room, not her room*. 

If your wife has no earned income, there is NO (immediate) tax benefit to her contributing to an RRSP (but the growth in the funds is tax-sheltered...however a TFSA, not an RRSP, is probably the best account for her at this point).


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## MoneyGal (Apr 24, 2009)

Let's use the examples you already provided: 

You have $5,000 of available contribution room. 

You could consider contributing $2,500 to your RRSP, and then $2,500 to a spousal RRSP you open in her name. You will take the tax deduction against the entire $5,000 of contributions. 

For now, I would do NOTHING with her $2,700 of available contribution room.


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## recklessrick (Jun 16, 2013)

MoneyGal said:


> Well...it makes no difference to your tax deduction...the "normal" purpose for a spousal RRSP is to equalize the pools of money from which spouses can draw in retirement. So if your spouse has a smaller RRSP than you do, one way to go is to put all your contributions in her spousal RRSP until you have similarly-sized accounts. Make sense?


It does make sense, yes. Keeping them equal is the real goal then I think.


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## cardhu (May 26, 2009)

recklessrick said:


> I have the application for a personal RRSP and a spousal RRSP with my wife's name attached to it... That should be what I need then, right? They just asked for her sin and dob, no signature or anything.


Be very careful … this sounds like a spousal account in your name, with her info attached to it as spousal contributor … this is *NOT* what you want … it wouldn’t be the end of the world if you had two RRSP accounts in your name, but there is no reason for the higher income earner to have a spousal RRSP, and it will NOT accomplish any income splitting.

Your wife should be the one opening the spousal account … not you … your role in all of this will simply be to make contributions into the account (out of your own contribution room), after SHE has set it up. 



recklessrick said:


> I'd still want to max out my personal room before spousal though, right?


No … if you do that, the spousal account will remain at a ZERO balance forever … you have to decide how best to split YOUR personal contribution room between your own personal RRSP, and her spousal RRSP.



recklessrick said:


> That way I can contribute into that spousal RRSP using her contribution room and I get the tax break. Sound right? ……
> I'd want to fill mine up, however long that takes, and then use her room as well.


You cannot EVER use your wife’s contribution room … only SHE can use it … and since she’s currently a stay-at-home mom, it makes no sense for her to contribute … her RRSP contribution room will go to waste, unless and until she re-enters the workforce at some point in the future, at which time making her own RRSP contributions in her own name might make sense. 

Once again, be careful … if income splitting is your goal, then YOUR WIFE should be opening up the spousal account … not you.


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## recklessrick (Jun 16, 2013)

cardhu said:


> Your wife should be the one opening the spousal account … not you … your role in all of this will simply be to make contributions into the account (out of your own contribution room), after SHE has set it up.


Exactly, that's what I want. The account has to be in her name with mine as a contributor. That is currently *not* how I've have the applications in front of me. I should just use the app for my personal RRSP and then she should have her own for her personal (she has some existing that we'd move over from when she worked) *and* a spousal with me listed as a contributor. 



cardhu said:


> No … if you do that, the spousal account will remain at a ZERO balance forever … you have to decide how best to split YOUR personal contribution room between your own personal RRSP, and her spousal RRSP.You cannot EVER use your wife’s contribution room … only SHE can use it … and since she’s currently a stay-at-home mom, it makes no sense for her to contribute … her RRSP contribution room will go to waste, unless and until she re-enters the workforce at some point in the future, at which time making her own RRSP contributions in her own name might make sense.


So I'm deciding how to split *my* $50,000 worth of RRSP contribution room? I will never be able to use her contribution room at all? If she never works for pay again, that $27,000 of RRSP contribution room will be just left there, not bing used. If so, I didn't know that. 



cardhu said:


> Once again, be careful … if income splitting is your goal, then YOUR WIFE should be opening up the spousal account … not you.


So the *only* reason I'd ever want to contribute to her spousal RRSP is so we would both have RRSP accounts for the future? So when we retire, we will each be drawing (example) 50k a year and getting taxed on that instead of me drawing 100k a year and getting taxed higher? Both getting taxed in a lower bracket that me getting taxed at a higher one?

If so, it's not a bad idea to split my RRSP contribution room between the two.


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## MoneyGal (Apr 24, 2009)

recklessrick said:


> So the *only* reason I'd ever want to contribute to her spousal RRSP is so we would both have RRSP accounts for the future?


What other reason would there be?


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## Guban (Jul 5, 2011)

Recklessrick,
Throw away your RRSP application form. Keep things (relatively) simple for now and just open the spousal one. You contribute using your limit and you take the deduction. There is time later to do things like balance your RRSP value and the spousal one.


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## mind_business (Sep 24, 2011)

Moneygal, can I put ALL of my available contribution room towards my wife's spousal RRSP, or does the Government limit this? I'm assuming if I had $50,000 RRSP room (which I don't), I could contribute the entire amount into my wife's spousal RRSP, AND I still get to claim the full amount for taxes???

I'm asking because right now we're not positioned very well for income-splitting during retirement. It's time I learn the rules


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## MoneyGal (Apr 24, 2009)

YES, you can put ALL of your available contribution room towards a spousal RRSP for which you are the contributor and your spouse is the annuitant and owner.


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## mind_business (Sep 24, 2011)

MoneyGal said:


> YES, you can put ALL of your available contribution room towards a spousal RRSP for which you are the contributor and your spouse is the annuitant and owner.


Thanks!


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## recklessrick (Jun 16, 2013)

Guban said:


> Recklessrick,
> Throw away your RRSP application form. Keep things (relatively) simple for now and just open the spousal one. You contribute using your limit and you take the deduction. There is time later to do things like balance your RRSP value and the spousal one.


That's not a bad idea at all. Thanks!


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## cardhu (May 26, 2009)

recklessrick said:


> she should have her own for her personal (she has some existing that we'd move over from when she worked) and a spousal with me listed as a contributor.


Correct … you only need one account, and she should have two. 



recklessrick said:


> I will never be able to use her contribution room at all? If she never works for pay again, that $27,000 of RRSP contribution room will be just left there, not bing used. If so, I didn't know that


Correct.



recklessrick said:


> So the only reason I'd ever want to contribute to her spousal RRSP is so we would both have RRSP accounts for the future?
> If so, it's not a bad idea to split my RRSP contribution room between the two


Correct … that is the very reason that the spousal RRSP exists.


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## cardhu (May 26, 2009)

mind_business said:


> … right now we're not positioned very well for income-splitting during retirement.


You may be better positioned than you realize … note that it is not necessary to have equal incomes in order to accomplish optimal income splitting … all that is necessary is for both of your incomes to top out within the same tax bracket, when ALL forms of income are taken into account. There are some pretty wide brackets in some provinces, so your incomes could be as much as $20k to $25k apart, and still be perfectly split, as far as income taxes are concerned. 



guban said:


> Throw away your RRSP application form. Keep things (relatively) simple for now and just open the spousal one. You contribute using your limit and you take the deduction. There is time later to do things like balance your RRSP value and the spousal one.


While I agree that balancing the values is something that can be done later, I disagree that rick should just open a spousal account … he is the higher income earner and he does not need a spousal account … it would make more sense for his wife to open a spousal account.


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## MoneyGal (Apr 24, 2009)

I don't think either the OP or his wife have RRSP accounts now, and I'm not sure what the logic is for "just open one account!"


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## Sampson (Apr 3, 2009)

Uh.. doesn't the income splitting occur when you retire and withdraw the funds? And don't the new regulations mean that you don't need to use spousal RRSPs to do this?


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## MoneyGal (Apr 24, 2009)

Yes to Sampson's post. Also, there are a few reasons why a spousal RRSP might still be of value, but they are essentially marginal to this case.


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## Guban (Jul 5, 2011)

Sounds like he is just learning the rules now and one account to keep track of would simplify his life.


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## MoneyGal (Apr 24, 2009)

So why pick the more complicated one, the one that involves two people to get set up?


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## cardhu (May 26, 2009)

MoneyGal said:


> I don't think either the OP or his wife have RRSP accounts now...


Well, 


restlessrick said:


> (she has some existing that we'd move over from when she worked)


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## MoneyGal (Apr 24, 2009)

Huh. OK. If the OP has NO money in ANY RRSP accounts, he should probably fund that one first. 

(He started his post saying they were ready to "start" investing in RRSPs, hence my surmise that they didn't have RRSP accounts yet.)


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## Guban (Jul 5, 2011)

cardhu said:


> You may be better positioned than you realize … note that it is not necessary to have equal incomes in order to accomplish optimal income splitting … all that is necessary is for both of your incomes to top out within the same tax bracket, when ALL forms of income are taken into account. There are some pretty wide brackets in some provinces, so your incomes could be as much as $20k to $25k apart, and still be perfectly split, as far as income taxes are concerned.
> 
> 
> While I agree that balancing the values is something that can be done later, I disagree that rick should just open a spousal account … he is the higher income earner and he does not need a spousal account … it would make more sense for his wife to open a spousal account.


I am referring to a spousal RRSP to which he contributes, and that is owned by his wife.


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## mind_business (Sep 24, 2011)

cardhu said:


> You may be better positioned than you realize … note that it is not necessary to have equal incomes in order to accomplish optimal income splitting … all that is necessary is for both of your incomes to top out within the same tax bracket, when ALL forms of income are taken into account. There are some pretty wide brackets in some provinces, so your incomes could be as much as $20k to $25k apart, and still be perfectly split, as far as income taxes are concerned.


I hear what you're saying, but right now the majority of our Retirement income will come from my Work Pension, Joint investments, my RRSP and of course CPP & OAS. We have been a single income family for many years, so if we don't change things up now, most of the income will be mine and taxed.


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## Guban (Jul 5, 2011)

MoneyGal said:


> Yes to Sampson's post. Also, there are a few reasons why a spousal RRSP might still be of value, but they are essentially marginal to this case.


They may wish to use the homebuyer's plan, or to balance an income stream from his open account after maxing out his RRSP contribution room and TFSA room. Or, perhaps they may withdraw the money from the spousal RRSP after waiting the 3 year attribution period and have it taxed in her hands. If this last stategy is to be used, all the more reason to open the spousal plan and make contributions sooner than later.

These basic RRSP/spousal RRSP definitions and rules should really be explained by the financial institutions, however.


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## cardhu (May 26, 2009)

MoneyGal said:


> Huh. OK. If the OP has NO money in ANY RRSP accounts, he should probably fund that one first.


It probably isn't a spousal account, and the bank would most likely balk at converting it to one ... it can be done, but probably easier (for the bank) to just open a new account.


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## MoneyGal (Apr 24, 2009)

What the flying flea is going on in this thread? Who said anything about converting a spousal RRSP (which I'm not actually sure can be done in any case, without fully depleting the account)? 

OP opened the thread saying he wanted to "start" funding RRSP accounts, and confused about what a spousal account is and how they work. 

Turns out he has a work pension, she has an RRSP, looks like he may have one also, they have investments (presumably unregistered?). 

Any advice the OP is going to get from this thread is based on such an incomplete picture that it likely is worthless. What's the original question anyways?


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## recklessrick (Jun 16, 2013)

Holy crow, what a great discussion!

Perhaps I need to read up on these new regulations. I was under the impression that a spousal RRSP let me use her contribution room, that is false. The other thing I've read here is that it would work for income splitting when we retire if we both have accounts to draw from. One poser said that new rules make this point of spousal RRSPs moot.

So what I'm thinking is that, to keep things simple, I should just open up a personal RRSP account and move my existing RRSP (only $1200) from the old, dead horse it's been riding. My wife can do the same with the small amount she has in RRSPs as well. Then, I'll just contribute into mine for the next few years and look into income splitting/spousal RRSP as we go along. We have 25 years before I look at retirement... I'd get the same benefit (reducing taxable income) now regardless of the kind of RRSP (spousal or not) seeing how it's just my contribution room I'd be using. Savvy?


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## Guban (Jul 5, 2011)

cardhu said:


> It probably isn't a spousal account, and the bank would most likely balk at converting it to one ... *it can be done*, but probably easier (for the bank) to just open a new account.


Can you explain how this is done? Haven't heard of this before.


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## cardhu (May 26, 2009)

mind_business said:


> I hear what you're saying, but right now the majority of our Retirement income will come from my Work Pension, Joint investments, my RRSP and of course CPP & OAS. We have been a single income family for many years, so if we don't change things up now, most of the income will be mine and taxed.


Both your work pension and the CPP, can be split anyway so those shouldn't throw you too far out of balance ... so can your RRIF after age 65 ... if you're older than she, then you'll receive the OAS sooner, which could present a temporary out-of-balance situation ... hopefully the joint investments are already split to the extent you're able to ... the real value to the spousal RRSP, these days, is for people who wish to use the RRSP funds to retire before age 65 ... beyond age 65, its pretty much a moot point.


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## MoneyGal (Apr 24, 2009)

recklessrick said:


> Holy crow, what a great discussion!
> 
> Perhaps I need to read up on these new regulations. I was under the impression that a spousal RRSP let me use her contribution room, that is false. The other thing I've read here is that it would work for income splitting when we retire if we both have accounts to draw from. One poser said that new rules make this point of spousal RRSPs moot.
> 
> So what I'm thinking is that, to keep things simple, I should just open up a personal RRSP account and move my existing RRSP (only $1200) from the old, dead horse it's been riding. My wife can do the same with the small amount she has in RRSPs as well. Then, I'll just contribute into mine for the next few years and look into income splitting/spousal RRSP as we go along. We have 25 years before I look at retirement... I'd get the same benefit (reducing taxable income) now regardless of the kind of RRSP (spousal or not) seeing how it's just my contribution room I'd be using. Savvy?


Yes.


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## MoneyGal (Apr 24, 2009)

Guban said:


> Can you explain how this is done? Haven't heard of this before.


I'm not aware than it can be, and although I stand to be corrected, I believe it cannot be. CRA says, 

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

_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._


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## recklessrick (Jun 16, 2013)

MoneyGal said:


> Yes.


Very good. Thanks!


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## cardhu (May 26, 2009)

Guban said:


> Can you explain how this is done? Haven't heard of this before.


What I mean is that there is provision in the law, for the nature of an RRSP to change ... any RRSP that receives a spousal contribution is deemed a spousal RRSP, even if it wasn't previously ... the banks may not be willing to do it, and they may even claim it is illegal, but it doesn't appear to be so.


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## cardhu (May 26, 2009)

MoneyGal said:


> Who said anything about converting a spousal RRSP ?


_You _suggested that OP should go ahead and make HIS contributions into HER existing RRSP ... _"he should probably fund that one first"_ ... if the bank were to accept that contribution, then that would result in conversion.



MoneyGal said:


> Turns out he has a work pension, she has an RRSP, looks like he may have one also, they have investments (presumably unregistered?).


You're skimming and missing details. It was mind_business who said he has a work pension and RRSP and joint investments ... not the OP.


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## MoneyGal (Apr 24, 2009)

I mean to say, if the OP has no funds in any retirement accounts, _he should fund his own RRSP first_. I apologize that I was unclear.


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## cardhu (May 26, 2009)

MoneyGal said:


> CRA says,
> _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._


I said nothing about transferring accounts with different annuitants, this is irrelevant to guban's question.

The conversion he and I were referring to is different ... and is off-topic, so since Rick seems to have the info he needs for now, nuff said.


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## Guban (Jul 5, 2011)

MoneyGal said:


> I'm not aware than it can be, and although I stand to be corrected, I believe it cannot be. CRA says,
> 
> http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/cntrbtng/spsl-eng.html
> 
> _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._


Thanks MG. That reference seems very clear.


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## Noam (Jul 3, 2013)

Is this the tdwaterhouse self directed Spousal Plan? www.tdwaterhouse.ca/products-servic...f-directed-rsp-rif/index.jsp#basic-sdrsp-info

If so, do I have to go into a branch to set it up as stated here? http://www.tdwaterhouse.ca/products...-investing/accounts/open-an-account/index.jsp

I already own a tdWaterhouse TFSA.


Thank you, Noam


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## Tawcan (Aug 3, 2012)

Stumbled onto this thread, very interesting discussions. I think I understand how spousal RRSP works - I have my contribution room, I contribute money to my spousal RRSP, the total amount I contribute to my and my spouse's account will be deducted. The idea to to have similar amount of RRSP so when we retire we have similar income.

Current situation
I already have an RRSP account, my wife doesn't. She's a year older than me.
I think it'd make sense to open a spousal RRSP account and start contributing money in there so the RRSP accounts have similar amount of money.

Does that make sense? What's the new regulation that ppl mentioned in this thread earlier?


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## Xoron (Jun 22, 2010)

Maybe I'm mistaken, but it sounds like a specific spousal RRSP account isn't needed anymore?

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


> Joey's 2012 RRSP deduction limit is $9,500. Joey contributes $4,000 to his RRSP in 2012, and $6,000 to his common-law partner Ghislaine's RRSP in 2012. Joey deducts the $4,000 he contributed to his RRSP on line 208 of his 2012 return. Although Joey contributed $6,000 to his common-law partner's RRSP in 2012, he can only deduct $5,500 of this contribution on his 2012 return ($9,500 - $4,000). He may be able to deduct the remaining $500 on a future year's tax return.


In this example, the husband is directly contributing to the wife's RRSP. Not into a specially designated "Spousal RRSP" account separate from his wife's. Did something change recently, or is this the way it's always been? Or am I'm interpreting it incorrectly?


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## MoneyGal (Apr 24, 2009)

If you look at the title of the section from which that example is drawn, and the paragraph immediately preceding it, you can see that they are referring to a spousal RRSP. 

I think you could argue that the wording is misleading, but I suspect CRA would respond that a spousal RRSP *is* the property of the annuitant, thus to refer to that RRSP as "Ghislaine's RRSP" is not incorrect. Take a look at the definition of spousal RRSP that bulletin links to - the definition is consistent with the wording in the passage you quoted and the rest of the bulletin. It *is* "Ghislaine's RRSP". It is an RRSP she set up and which Joey contributes to. 

When you think about it, though, it is evident that it MUST be set up as a spousal RRSP in order for the contributing spouse (not the annuitant) to claim the deduction. In this example, they are focusing on the contribution but NOT the mechanics of how a spousal RRSP is set up.


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## Xoron (Jun 22, 2010)

I agree, I've always thought a specific Spousal RRSP was needed for one spouse to contribute to the other's RRSP. And it had to be separate from any existing non-spousal RRSP account. But the CRA really doesn't make it clear:

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


> *Registered retirement savings plan (RRSP)* This is a retirement savings plan that you establish, that we register, and to which you or your spouse or common-law partner contribute. Any income you earn in the RRSP is usually exempt from tax as long as the funds remain in the plan; you generally have to pay tax when you receive payments from the plan.


The RRSP definition is ambiguous and makes it sound like either spouse can contribute to a single RRSP account.


http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/glssry-eng.html#partner



> *Spousal or common-law partner RRSP* An RRSP that you establish to pay yourself income at maturity, but that your spouse or common-law partner contributes to.


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## MoneyGal (Apr 24, 2009)

It will sound like I am splitting hairs, but the CRA wording is accurate. The definition of "spousal or common-law RRSP" is clear. And the definition of RRSP is also clear. 

The reality is that the category "RRSP" includes both a non-spousal RRSP and a spousal RRSP. However, an additional condition or a distinguishing condition of a spousal RRSP is that the contributor and the annuitant are spouses of one another, as noted in the definition of spousal RRSP. 

Anyways, at this point I am just typing the same thing over and over. I could draw a Venn diagram to describe the same thing! It would have a big category "RRSP" and then a second category, "spousal RRSP" entirely contained in the first category, but with one added condition.


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## Guban (Jul 5, 2011)

Tawcan said:


> Stumbled onto this thread, very interesting discussions. I think I understand how spousal RRSP works - I have my contribution room, I contribute money to my spousal RRSP, the total amount I contribute to my and my spouse's account will be deducted. The idea to to have similar amount of RRSP so when we retire we have similar income.
> 
> Current situation
> I already have an RRSP account, my wife doesn't. She's a year older than me.
> ...


Not sure about the new regulation that you are referring to. Pension splitting perhaps?
See: http://www.cra-arc.gc.ca/pensionsplitting/

Sounds like you have the general idea about balancing incomes, but as was pointed out, the incomes don't have to be exactly the same, but so long as they are in the same tax bracket, things should be optimized. Pension splitting helps a lot on this point.

I don't think that there is enough information to make a suggestion about your situation. It would be nice to know things like: Do either of you have pensions? How much non-registered money do each of you have? will you be using the RRSP's for the home buyers or life long learning plan? Will there be any RRSP withdraws in years that there is very little/no income? (for instance if a parent stops working to look after kids) What is your individual current/future tax brackets and TFSA contribution room status?


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## fraser (May 15, 2010)

I think the trick is to understand you and your spouse's current tax position (marginal tax rate), have an understanding of what you think the respective tax rates are when you eventually withdraw, AND understand the special withdrawal conditions, ie I think the money has to stay in a spouse's spousal RSP for something like a minimum of two years. It if it is, for instance one year, the spouse who took the deduction will be the spouse that gets taxed.

In our situation, the pension splitting rules and the low interest rate on spousal loans (income attribution), and TFSA's have made contributing to spousal RSP a mute point. I would think that a large age difference between spouses would add another variable to the equation.


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## Tawcan (Aug 3, 2012)

Guban said:


> Not sure about the new regulation that you are referring to. Pension splitting perhaps?
> See: http://www.cra-arc.gc.ca/pensionsplitting/
> 
> Sounds like you have the general idea about balancing incomes, but as was pointed out, the incomes don't have to be exactly the same, but so long as they are in the same tax bracket, things should be optimized. Pension splitting helps a lot on this point.
> ...


Yeah I meant the pension splitting when I referred to the new regulation.

Neither of us have pensions. We both have some money in non-registered accounts. Do not plan to draw RRSP until much later and do not plan to use RRSP for home buyers or life long learning plan. We both have TFSA and have maximized our contribution rooms.


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## Eclectic12 (Oct 20, 2010)

fraser said:


> ... ie I think the money has to stay in a spouse's spousal RSP for something like a minimum of two years. It if it is, for instance one year, the spouse who took the deduction will be the spouse that gets taxed ...


Agree with most of what you've written.

The minimum two years to avoid attribution rules could be right or it could be off the mark.

Based on this 2012 G&M Q&A, it's *three calendars years* after the last contribution was made to avoid the attribution rules. In the link's example, the last spousal RRSP contribution was suggested as Feb 1, 2012 which is stated to mean that Jan 1, 2015 is the earliest a withdrawal won't have a tax impact on the contributing spouse. 

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

That's where Mar 1, 2014 is two years later but would result in the attribution rules kicking in (i.e. withdrawal taxed at the contributor's tax rate instead of the RRSP holder's tax rate).



This MoneySense article makes similar points and provides a list of when the attribution rules won't apply.
http://www.moneysense.ca/2011/10/04/the-facts-on-spousal-rrsp-withdrawals/


Cheers


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