Who can contribute to a Spousal RRSP?

Technically, the higher income-earning spouse is the contributor and the lower income spouse is the annuitant, but both spouses can contribute to a Spousal RRSP. More commonly, both spouses contribute to the same Spousal RRSP with both claiming their respective contributions on their respective income tax returns. The following flowchart illustrates this type of investment process:

Spousal RRSP

The advantage of using a Spousal RRSP for contributions from both spouses is that it simplifies the management and administration of your retirement savings by minimizing the number of RRSP accounts. It will also create a larger single retirement account, which may further reduce your investment costs, as most financial institutions offer reduced transaction and administrative fees for larger accounts.

The disadvantage of using a Spousal RRSP for contributions from both spouses concerns the Canada Revenue Agency’s (CRA’s) anti-avoidance rules. For example, if the annuitant spouse withdraws monies from the spousal plan and the higher income spouse has contributed to the Spousal RRSP in the year of the withdrawal or either of the two preceding years, the withdrawal will be taxed in the higher income contributor’s hands, not the annuitant spouse’s hands.

Contributions to a Spousal RRSP can continue until the year that the annuitant spouse turns 71 years of age. Even if the higher income spouse is older than 71 years of age, they can still make contributions to the Spousal RRSP as long as they have RRSP contribution room and the annuitant is 71 years and younger. 

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