RRSP Season – Consider Spousal RRSP Contributions

Posted Thursday, January 20th, 2011. Filed Under Financial Empowerment

Welcome back to Jay Llave and happy New Year. We are in the thick of RRSP contribution time and Jay has provided us with information on Spousal RRSP contributions. While this is relevant for Canada you can check with your own state/province/country to see what are the rules that apply to spousal retirement savings contribution.

3 Reasons to Use A Spousal RRSP:

By reducing the income tax you pay in retirement, you’ll have more to spend. A spousal RRSP might just be the ticket. Contrary to what you might have heard, rules introduced in 2007 – that let retired couples split pension income – did not kill the spousal RRSP.

Here are three situations for which a spousal RRSP is still useful:

1. You’re planning to retire early.

Because pension-income splitting is largely restricted to those 65 and older, a spousal RRSP is a viable income-splitting and tax-saving tool for couples who want to retire early.

2. You need to withdraw a large sum from your RRSP.

A spousal RRSP can also help with lump-sum RRSP withdrawals.
These aren’t eligible for pension-income splitting, but couples can build up the lower-income spouse’s RRSP and withdraw from that plan at a lower rate.
**Note, however, that if you make a spousal RRSP contribution in the same year or either of the following two calendar years, the amount withdrawn by your spouse will be attributed back to you and taxed in your hands.

3.You have a younger spouse.

A spousal RRSP means you can contribute qualifying income to your younger spouse’s RRSP after the end of the year you turn 71 – when you must wind down your own plan – so your household retirement savings can continue to build.

Setting up a spousal RRSP gets you and your spouse to start your planning
well in advance. Let’s discuss whether this strategy might work for you .

Best regards,

Jay F. Llave

“Create and Protect Wealth”
Insurance and Financial Advisor
Creative Planning Financial Group
(416) 487-5210 ext. 5317

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