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financial planning Ottawa

Are you married or in a common-law relationship? Do you make considerably more than your spouse? If so, you may want to consider making spousal RRSP contributions. Using a spousal RRSP has many financial benefits. Here are five things you need to know.


1. You can get tax breaks now

If you make more money than your spouse, you can increase your tax deferral by putting some of your earnings into your spouse’s RRSP. You’ll get the same tax deduction that you’d get if you contributed to your own RRSP.

Additionally, your spousal RRSP contributions count against your annual deduction limit but not that of your spouse. As a couple, you can earn more tax credits and deductions by making spousal RRSP contributions.

2. You can get future tax breaks

Putting money into your spouse’s RRSP has tax benefits during retirement. Once you retire, you can withdraw more money from your spouse’s RRSP and depend less on your RRSP, which is taxed at a higher rate.

3. You can save and defer taxes longer

You can’t contribute to your RRSP after the age of 71. However, if you’re still earning income at that age, you can contribute to your spouse’s RRSP, as long as they’re under 71. This allows you to put money away and defer taxes for longer.

4. Your spouse owns the money

Any money you contribute to a spousal RRSP becomes the legal property of your spouse. They control the account, and when they withdraw money from the RRSP, it’ll be taxed as their income (with one exception). Only the person who controls the RRSP account can make withdrawals.

5. There are rules for withdrawing money from your spouse’s RRSP

If your spouse withdraws money from their RRSP within three years of a contribution you made, that withdrawal must be claimed at your tax rate. The rule is calculated in calendar years, not years from the last contribution. So, if you contributed in December of 2020, you’d have to wait until January 2023 to withdraw money without penalty.

If you’re struggling to make monthly RRSP contributions due to mounting debt and bills, seek the help of a financial expert. A licensed insolvency trustee can help you pay your debts down more quickly and start saving for retirement.



At D. & A. MacLeod Company Ltd., our debtor assist services can help you take control of your finances so you can save for retirement. We also offer credit counselling services. Contact us today to schedule a free financial consultation to start your journey to financial freedom. We have seven locations across eastern Ontario.


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