A Spousal RRSP is one in which the contributor and annuitant are not the same individual. Typically the spouse with the higher annual income, or potential higher pension income in retirement, will set up a Spousal RRSP for the spouse with the lower income. The following flowchart illustrates this type of investment process:
The Spousal RRSP enables the higher income-earning spouse to contribute to an RRSP, claim the contribution credit on their income tax return, and have the contributions and accumulated RRSP income paid to their spouse at a future date. The Spousal RRSP enables one spouse to split their retirement income with their spouse.