# Spousal RRSP and My Situation



## crr243 (Nov 2, 2015)

Hey all,

I know what a Spousal RRSP is and I know why it would benefit me. I'll outline my situation and how I plan on dealing with it. I'm merely looking for a sober second thought.

My wife and I married in July, 2015. Our personal situation looks like this:

Husband (me)
Age: 31
Net Annual Income: $110,000
RRSP: $60,000, held with TD (e-series)
DCPP: $40,000, with SunLife
TFSA: $20,000, with TD Direct Investing (TDDI)

Home: Approx $350,000 value with $225,000 left on the mortgage. I financed a $290,000 mortgage in 2012 at 30 years at 2.99% fixed. However, I've doubled up on payments and have 9 years to go at current contribution amounts. My current term is up on March 1, 2016, so I'll be making phone calls very soon here...

Wife
Age: 26
Net Annual Income: $65,000
RRSP: $20,000, with TD (e-series)
TFSA: $20,000, with TD (e-series)

We also have about $25,000 in cash, and no non-mortgage debt.

The investments (RRSP and TFSA) for both of us are in TD e-series funds with a mix of 25% Canadian equity, 25% US equity, 25% international equity, and 25% Canadian bonds. The asset mix is the same for my DCPP, but is in BlackRock funds as those are the index funds available through the SunLife plan. In other words, I'm a couch potato. 

Now that we're married, I intend on very soon (i.e. this month) opening a Spousal RRSP to start to balance our assets. I also want to consolidate our accounts a bit and have them under the same banner at TDDI. I've been mulling over how to accomplish this. The plan I've come up with is as follows, and is what I'm seeking input on.

1. Transfer my RRSP, in kind, to TDDI. Close my RRSP at TD.
2. Transfer my wife's TFSA, in kind, to TDDI. Close her TFSA at TD.
3. Open a Spousal RRSP in my wife's name at TDDI.
4. Transfer my wife's RRSP assets, in-kind, to the new TDDI Spousal RRSP.
5. Immediately top up my wife's RRSP to at least $25,000 to avoid the annual fee.

For the foreseeable future, my contributions will be to the Spousal RRSP (through my wife, obviously). My wife's contributions will be to her TD RRSP in order to keep a marked separation between her Personal and Spousal RRSP. 

I intend to use the initial conversion/transfer of funds from her personal RRSP to the new Spousal RRSP as a mechanism to boost her Spousal RRSP to $25,000 immediately to avoid paying TDDI an annual fee.

The end result allocation will be:

Husband
RRSP: $60,000, with TDDI
DCPP: $40,000, with SunLife
TFSA: $20,000, with TDDI

Wife
Spousal RRSP: $25,000, with TDDI
TFSA: $20,000, with TDDI
RRSP: $0 (initially), with TD (e-series)

My wife will continue to contribute to her personal RRSP. I will contribute to the Spousal RRSP until her assets are more in line with mine. When these accounts are all opened and switched I'll have about $55,000 more than her, so that'll likely last for 2-3 years.

Some some questions:

1. Does this make sense?
2. Should I keep her personal RRSP and the Spousal RRSP separate, as intended?
3. What are the drawbacks, other than the attribution rules, to transferring my wife's RRSP into her newly opened Spousal RRSP?
4. Does anyone know if I can transfer e-series in-kind from a TD Mutual Fund account to a TDDI account, or do I need to sell and buy?
5. Is there a better way to do this? Should I instead get my wife to open a Spousal RRSP at TD and transfer that over to TDDI once it reaches $25,000?

Thanks!


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## Eclectic12 (Oct 20, 2010)

It seems odd to be "consolidating" with TDDI when there is currently so much already with TD.

As long as the TD allows a Spousal RRSP, I'd be opening that and then considering the transfer to TDDI later, when the accounts have the minimum amount plus a buffer. Is there any hurry to be diving into other investments?


As for transferring e-series from TD MF to a TDDI account without selling ... I was able to do with regular TD MFs so it seems logical this would work.


Cheers


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## wendi1 (Oct 2, 2013)

You can't do #4 (and I don't know why you would want to). You can take out all her RRSP money, triggering tax consequences, and losing her $25K contribution rooom forever, have her give it to you, then you open a new spousal RRSP for her. You might get slightly more tax refund than she will pay, but I think this will not be very much. Some of it will come off the $25K immediately, to be refunded at tax time.

If you are putting money in a spousal RRSP, it belongs to her, not to you. The contribution room for the spousal RRSP comes off of your contribution room, not hers, but she has control over it, and if she withdraws it within 3 years, the tax payable belongs to you, not her. She cannot open a spousal RRSP for herself, you have to open it. She can have both a spousal RRSP, and a personal RRSP.

I would ask your transfer questions to TDDI - you might have to fax them your wife's and your statements. I always found it worked better to have the "getting" discount broker start the process, as they have a vested interest in getting it done quickly.

The whole "making our RRSPs the same size" thing became a lot less important when the feds started allowing income splitting for seniors. Whether you think this will continue under Trudeau is a judgement call.

Myself, I would leave her RRSP alone. If you have kids in the future, she might want to remove some of it when her income is low or zero (harder to do from a spousal, as the tax becomes payable to you if she takes it out within 3 years of the contribution).


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## AltaRed (Jun 8, 2009)

Only two comments to add:

1) it is pension splitting for seniors and while there is no suggestion that could be taken away, governments change the tax code on a regular basis. I would suggest a separate spousal RRSP remains a good idea.

2) I am indifferent to multiple accounts with one institution. Indeed I personally prefer dealing with fewer rather than more.


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## Eclectic12 (Oct 20, 2010)

wendi1 said:


> You can't do #4 (and I don't know why you would want to).


I read # 4 as wondering if TDDI would accept the e-series MFs. They are part of the same group where I thought I saw TDDI listing eSeries as on of the funds one can buy.

Now I'm not clear on whether her RRSP can be transferred the spousal RRSP she owns but I believe that is a different question.




wendi1 said:


> You can take out all her RRSP money, triggering tax consequences, and losing her $25K contribution rooom forever, have her give it to you, ...


I'm not sure a withdrawal is required. Apparently, a regular and spousal RRSP can be combined where the combined account is a spousal RRSP going forward.
http://www.taxtips.ca/rrsp/combinespousalrrsp.htm


Worst case, if a "regular to spousal RRSP" transfer is not allowed, it would seem a transfer of the regular RRSP would work. One would need to open the spousal RRSP then combine the two.




wendi1 said:


> ... then you open a new spousal RRSP for her.


Strange ... the articles I've read say the owner of the RRSP is the one who has to setup the spousal RRSP.
http://www.ctvnews.ca/business/shou...-on-your-family-income-says-experts-1.2216672


Cheers


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## crr243 (Nov 2, 2015)

wendi1 said:


> You can't do #4 (and I don't know why you would want to). You can take out all her RRSP money, triggering tax consequences, and losing her $25K contribution rooom forever, have her give it to you, then you open a new spousal RRSP for her. You might get slightly more tax refund than she will pay, but I think this will not be very much. Some of it will come off the $25K immediately, to be refunded at tax time.
> 
> If you are putting money in a spousal RRSP, it belongs to her, not to you. The contribution room for the spousal RRSP comes off of your contribution room, not hers, but she has control over it, and if she withdraws it within 3 years, the tax payable belongs to you, not her. She cannot open a spousal RRSP for herself, you have to open it. She can have both a spousal RRSP, and a personal RRSP.


I don't see why I would ever want to physically remove money from her RRSP and trigger the tax consequences. It is certainly possible to transfer RRSP from one institution to another. I did so when I moved all of my investments from balanced mutual funds to index funds a few years ago. What I was proposing was not withdrawing her RRSP, but submitting the necessary paperwork to _transfer_ it between institutions (or, in this case, different arms of the same institution).

I understand how a Spousal RRSP works. However, my understanding of how to open the Spousal RRSP seems to differ from what you have stated here. From my understanding, she, as the lower income earner, opens the Spousal RRSP. She becomes the owner and the beneficiary. I become the contributor. However, while Spousal contributions utilize my contribution room, only she can make the actual investment decisions in the account. 

After a few comments here, I think I'll ammend my plan:

1. Open a Self-Directed RRSP at TDDI (note: this was formerly TD Waterhouse) for myself. Transfer my personal RRSP to this new TDDI RRSP. Close my current Personal RRSP. I prefer the interface and flexibility TDDI gives me over the basic TD e-series mutual fund account.

2. Make an appointment with my wife to open a Spousal RRSP at TD, with her as owner/beneficiary and me as the Spousal contributor, provided this is possible. 

Once her Personal and Spousal RRSP are past the ~30k mark in a couple years, I'll transfer them to TDDI to benefit from their interface.

If opening a Spousal RRSP at TD isn't possible, things get complicated because I'd really like to avoid paying TDDI's annual account fee.


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## crr243 (Nov 2, 2015)

Eclectic12 said:


> I read # 4 as wondering if TDDI would accept the e-series MFs. They are part of the same group where I thought I saw TDDI listing eSeries as on of the funds one can buy.
> 
> Now I'm not clear on whether her RRSP can be transferred the spousal RRSP she owns but I believe that is a different question.
> 
> ...


Correct on all accounts, from how I understand the regulations.

As noted in my initial post, I have a TFSA with TDDI and a RRSP e-series account with TD. Both have investments in TD e-series funds. The fund codes are identical, so I'd assume they're transferable in-kind. 

I much prefer the interface at TDDI, so there's some personal convenience benefit to transferring my investments to that arm of TD.


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## crr243 (Nov 2, 2015)

crr243 said:


> 2. Make an appointment with my wife to open a Spousal RRSP at TD, with her as owner/beneficiary and me as the Spousal contributor, provided this is possible.


I'll have to call or set up an appointment with TD, because I'm having trouble determining if it's even possible to set up a Spousal RRSP with TD rather than TDDI.


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## Soon Forget (Mar 25, 2014)

crr243 said:


> 1. Does this make sense?
> 2. Should I keep her personal RRSP and the Spousal RRSP separate, as intended?
> 3. What are the drawbacks, other than the attribution rules, to transferring my wife's RRSP into her newly opened Spousal RRSP?


Your plan makes sense and is basically the same as what we did when transferring to TDDI from a different institution. We consolidated my wife's personal RRSP and her already-existing Spousal RRSP into one account, which by default is labelled as a Spousal RRSP. She makes her personal contributions into this account and I make my spousal contributions into it as well. We chose not to keep her a separate Personal RRSP for the simplicity of having fewer accounts to manage. The only consequence is the attribution rules you mentioned if we were to make a withdrawal within 3 years of a spousal contribution. I don't foresee that happening.

Also keep in mind that the purpose of all of this is to use RRSP withdrawals to equalize taxable income *before age 65.* After age 65 the income from an RRSP can be split for tax purposes regardless of which account it came from (as per our current tax laws, which as AltaRed said could be changed in the future).


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## Eclectic12 (Oct 20, 2010)

crr243 said:


> Correct on all accounts, from how I understand the regulations.
> 
> As noted in my initial post, I have a TFSA with TDDI and a RRSP e-series account with TD. Both have investments in TD e-series funds. The fund codes are identical, so I'd assume they're transferable in-kind.


Without calling TDDI/TD to ask for sure ... the only wrinkle I can see if whether one could open a Spousal RRSP at TDDI then do the paperwork to transfer from a personal RRSP. It does not appear to be a showstopper as it appears one could open both a personal plus a spousal RRSP at TDDI then merge them. If this appears to be needed, I'd want to talk it through with TDDI as there could possibly be fees around the merge process.





crr243 said:


> I'll have to call or set up an appointment with TD, because I'm having trouble determining if it's even possible to set up a Spousal RRSP with TD rather than TDDI.


Where TD already offers an RRSP, I'd expect there would also be a spousal version but it is good to confirm before making a decision.


Cheers


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## Eclectic12 (Oct 20, 2010)

Soon Forget said:


> Your plan makes sense and is basically the same as what we did when transferring to TDDI from a different institution. We consolidated my wife's personal RRSP and her already-existing Spousal RRSP into one account, which by default is labelled as a Spousal RRSP.


Good to hear confirmation from someone who has done it.

Not to nit pick ... but from the tax tips link, apparently it is the tax law the forces the merged RRSP to be a Spousal RRSP going forward.


Cheers


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## Soon Forget (Mar 25, 2014)

Eclectic12 said:


> ... from the tax tips link, apparently it is the tax law the forces the merged RRSP to be a Spousal RRSP going forward.


Ya, that's correct. I was loose with my wording. Since the new account holds some funds that once were held in a Spousal account, the new account must also be Spousal.

The merger at TDDI did not have any fees, and was done quickly and easily with an agent on the phone.


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## crr243 (Nov 2, 2015)

Thanks for the feedback and confirmation, Soon Forget! 

I have a colleague who invests with TDDI. I spoke with him this morning and his setup is identical to what I was thinking of doing. He consolidated his wife's RRSP into a Spousal RRSP when they moved her finances over to TD/TDDI. Her contributions are all to the Spousal RRSP, while his contributions are either to her Spousal RRSP or to his Personal RRSP, depending on where best equalizes the assets between them. 

He showed me the interface at TDDI. For his wife's RRSP (their Spousal RRSP), he can only contribute through her account, as expected. When he logs into his wife's account to make a contribution to the Spousal RRSP, he has two radio buttons: Personal and Spousal. Personal dips into her contribution room; Spousal dips into his. They are properly separated for accounting purposes come tax time. 

When he logs in to his own account, he can actually _see_ his wife's Spousal RRSP. While he can not _contribute_ to the Spousal RRSP from his own account, he can seemingly make investment decisions from inside his account. In other words, he has to log in as his wife to make the Spousal contribution and add funds to the account, but he can thenceforth log in as himself to make further investment decisions and re-balance the funds within the RRSP as necessary.

I'm still debating whether or not to just consolidate my wife's finances as a Spousal RRSP, as it'll simplify investment decisions (especially whenever I re-balance), and I don't see the attribution rules impacting us.


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## Soon Forget (Mar 25, 2014)

Your friend and I could be the same person! He must have his set up slightly different though because I can't see my wife's Spousal account from my interface. I have to log in as her to make contributions (spousal funds coming from a joint chequing account) as well as to do any transactions. We do have each other listed as Power of Attorney for each other's accounts so I still do have the legal right to make investment decisions in her account (and vice versa).

With respect to combining the accounts, if you're not sure yet then hold off for a while and think on it. Once you do it, it can't be undone so you want to be sure about the move... so long as you're not paying account fees in the meantime on a lower balance.


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