What Is Spousal RRSP?

Knowing how to utilize a Spousal RRSP can help reduce tax and maximize retirement income.
What Is Spousal RRSP
Article Overview

Working together with your spouse can make a significant difference when it comes to planning for a secure financial future. The Registered Retirement Savings Plan (RRSP) for Spouses is a strategy that can help you maximize your retirement savings and reduce your tax liability. In this article, we’ll delve into the world of spousal RRSPs, describing what they are, how they function, and the benefits they offer to couples seeking to optimize their retirement plans. Therefore, let’s explore this smart financial strategy that can strengthen your partnership and secure your future.

What Is Spousal RRSP?

A Spousal RRSP is a registered retirement savings plan that permits a higher-earning spouse to make contributions in the name of their lower-earning or non-working spouse. The contributing spouse receives a tax deduction for the contribution, while the recipient spouse becomes the plan’s owner and has complete investment control.

How does a Spousal RRSP work?

Spousal RRSP mechanics are relatively straightforward. The contributing spouse makes the contribution to their partner’s RRSP account. The contribution amount is based on the contribution room available to the contributing spouse. The funds contributed to the Spousal RRSP are considered to be the receiving spouse’s assets, and they become theirs.

Tax benefits of a Spousal RRSP

One of the most significant advantages of a Spousal RRSP is its tax advantages. By contributing to a Spousal RRSP, the higher-earning spouse can potentially reduce their overall tax liability by splitting their income with their companion. When the receiving spouse withdraws funds during retirement, the income is generally taxed at their individual tax rate, which may be lower if their income is lower.

Spousal RRSP can help spouses achieve income parity in retirement. By balancing retirement savings between partners, the likelihood of one experiencing a higher tax bracket or facing potential clawbacks of government benefits due to a higher income is reduced.

Moreover, a Spousal RRSP enables the contributing spouse to continue contributing to their own RRSP while allowing them to utilize their partner’s unused contribution space.

Impact on Retirement Savings

A Spousal RRSP can have a considerable impact on both spouses’ retirement savings. It allows the lower-earning spouse to save for retirement while taking advantage of tax advantages. This can result in a more comfortable retirement for both partners and help them maintain their standard of living without having to rely solely on one partner’s retirement savings.

In addition, if the contributing spouse has maxed out their own RRSP contributions, the Spousal RRSP provides an additional way to save for retirement while experiencing the associated tax benefits.


A spousal RRSP enables a higher-earning spouse to make contributions to an RRSP in the name of their lower-earning or non-working spouse. It helps equalize retirement savings, reduces taxes, and guarantees a more balanced retirement income.

The higher-earning spouse should report the spousal RRSP contribution on their tax return to receive the tax deduction associated with the contribution.

The three-year rule for spousal RRSPs is called the attribution rule. It stipulates that any amount withdrawn from a spouse’s RRSP within three years of the last contribution will be attributed back to the contributing spouse and taxed in their hands, rather than the receiving spouse.

Yes, both partners can make contributions to a spousal RRSP. As long as there is contribution room, the contributing spouse may make contributions to the spousal RRSP account held in the name of their lower-earning or non-working spouse.

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Written by:

Jim Pan, CFP, MFA-P

Jim is a dedicated, fee and advice only independent Certified Financial Planner with a focus on supporting healthcare business owners during their crucial growth phase. His expertise lies in offering comprehensive solutions to minimize taxes while embracing a holistic approach. With a career spanning back to 2010, Jim has established a strong presence in the financial industry. He proudly holds a range of designations, including Certified Financial Planner (CFP), and Master Financial Advisor - Philanthropy (MFA-P). He is currently pursuing additional designations and qualifications to better serve his clients and community. Beyond his qualifications, Jim is a member and an esteemed participant in the Million Dollar Round Table (MDRT), an exclusive global association comprising the top 1% of financial advisors. Jim's commitment extends to the community, where he spearheads numerous charitable fundraising events and plays an active role in enhancing the well-being of others. Additionally, he has contributed significantly by serving on the board of the Canadian Mental Health Association in Vancouver. Currently, he volunteers with Junior Achievement of British Columbia (JABC) to present personal finance topics to youths.

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