Menu Toggle
  1. Home
  2. Banking
  3. Spousal RRSPs: Contribution and Withdrawal Rules
Published June 13, 2022

Spousal RRSPs: Contribution and Withdrawal Rules

A spousal RRSP allows the higher-earning partner in a married or common-law couple to contribute to a retirement savings account in the other partner’s name.

Many Canadians use a registered retirement savings plan, or RRSP, to save for retirement. A spousal RRSP: a similar version of this registered account designed for married couples and common-law partners. Depending on the couple’s financial situation, a spousal RRSP can have a huge impact on their shared tax burden.

What is a spousal RRSP?

A spousal RRSP is a retirement savings account that is owned by one person (the annuitant or plan holder) but holds funds that are contributed by their spouse or common-law partner (the contributor).

Spousal RRSPs are particularly advantageous for couples where one partner is likely to be in a higher tax bracket than the other when they retire.

For example, let’s say one spouse is a high-income earner and contributes regularly to their RRSP, while the other is a stay-at-home parent. This could create a situation in which the first partner has a significant amount saved in their RRSP but pays a higher income tax rate, whereas the partner who stayed home might be at a lower tax rate, but have a limited amount in their RRSP.

With a spousal RRSP, the couple could contribute toward retirement savings in a more balanced manner. That could lead to lower combined taxes when they start withdrawing funds in their retirement years.

How spousal RRSPs work

Most major financial institutions offer spousal RRSPs for couples.

Even though the contributor provides the funds, the annuitant owns the account and makes the investment decisions. They’re also the only person allowed to withdraw money from the account.

Contributions to a spousal RRSP count towards the contributor’s RRSP tax deduction limit, and don’t affect the annuitant’s deduction limit. Avoid over-contributing to your RRSPs or you’ll face penalties.

Spousal RRSP vs. personal RRSP

A personal RRSP and spousal RRSP are two different accounts. You can have both, whether you’re the contributor or the annuitant. For example, if you’re the higher-earning spouse, you can have your own personal RRSP and contribute to a spousal RRSP for your partner, who can also have their own separate personal RRSP. Your different RRSP accounts can even be at different financial institutions.

However, know you have only one pot of RRSP contribution room based on the income you earned in the previous year. You can allocate that contribution room however you’d like between the two accounts.

For example, if you have $10,000 of RRSP contribution room, you could contribute $5,000 to each plan or contribute different amounts, as long as they don’t add up to more than $10,000.

Spousal RRSP contribution rules

Spousal contribution limits are determined by the contributor’s overall limit. Opening a spousal RRSP does not give you additional contribution room.

RRSP contribution room is based on 18% of your previous year’s earned income, up to $29,210 for 2022. Any unused contribution room gets carried forward to future years.

Spousal RRSP withdrawal rules

A spousal RRSP must be converted to an registered retirement income fund, or RRIF, by Dec. 31 of the year the annuitant turns 71. The annuitant would then have to withdraw a minimum amount based on their age, which would be taxed at their marginal tax rate.

Early withdrawals from a spousal RRSP are allowed, but a three-year attribution rule applies. That means you have to wait the remainder of the calendar year plus two full years, without making any contributions, before withdrawing funds. If the annuitant withdraws funds before that time has passed, it will be taxed as part of the contributor’s income.

Let’s say you made a spousal RRSP contribution in November 2020. You’d have to wait until 2023 to make any withdrawals if you want the funds to be taxed in your spouse’s name. If you made any contributions in 2021 or 2022, the clock would reset and you’d start the three-year wait again.

Contributors are not required to claim their spouse’s withdrawals as income in the following situations:

  • Withdrawals are made after the relationship ends.
  • You’re not a resident of Canada.
  • The money is used for the Lifelong Learning Plan.
  • The contributor dies in the year of the withdrawal.

Spousal RRSPs can be complicated. If you think one might be useful for you, it’s a good idea to speak with a financial professional who can explain how the benefits and drawbacks may apply to your situation.

Benefits and drawbacks of a spousal RRSP

Like any retirement savings strategy, contributing to a spousal RRSP comes with advantages and disadvantages.

Benefits of a spousal RRSP

  • Immediate tax deduction. Contributions made to a spousal RRSP give the contributor an immediate tax break, lowering their taxable income.
  • Potential future tax break. When it’s time to withdraw funds from the accounts in retirement, splitting income between members of a couple could mean a lower tax bill overall.
  • Home Buyers’ Plan. First-time homebuyers can borrow up to $35,000 from their RRSPs as part of the Home Buyers’ Plan. A spousal RRSP would allow couples to access up to $70,000.
  • Continued contributions. Taxpayers can’t contribute to their own RRSPs after Dec. 31 of the year in which they turn 71. However, they can continue to contribute to the spousal RRSP if their spouse is younger than 71 and they have contribution room available.

Drawbacks of a spousal RRSP

  • Three-year attribution rule. Spousal RRSP contributions must stay in the account for the remainder of the calendar year plus two more years before they can be withdrawn as the annuitant’s taxable income. If money is withdrawn within three years, it will be included in the contributor’s taxable income. Plus, the three-year timing applies to the most recent contribution, not the first one. However, this rule does not apply to Home Buyer’s Plan withdrawals, which can be made within three years of a contribution.
  • Can be complicated if the relationship breaks down. Even though the annuitant owns the account, the contributor may seek out an equalization payment to even things out. However, it’s important to seek professional advice from a financial advisor to help you navigate this complex process.

Frequently asked questions about spousal RRSPs

Can I contribute to my own spousal RRSP?

No, a spousal RRSP is designed to allow you to contribute to someone else’s retirement savings. You can contribute to a spousal RRSP for your partner and a personal RRSP for yourself, and your partner can do the same.

Who claims a spousal RRSP contribution?

Tax deductions for contributions to a spousal RRSP are claimed by the contributor, and don’t affect the annuitant’s deduction limit.

About the Author

Barry Choi

Barry Choi is a personal finance and travel expert. His website is one of Canada's most trusted sites when it comes to all things related to money and travel.

Read More
10 RRSP Benefits You Shouldn’t Ignore

10 RRSP Benefits You Shouldn’t Ignore

Putting money away in a registered retirement savings plan, or RRSP, can be about more than just getting a tax break and building your nest egg. There are several RRSP benefits to know so you can get more out of your plan now and after retirement. 1. RRSP contributions reduce your taxable income The first […]

Should You Stash Cash in an RRSP or TFSA?

Should You Stash Cash in an RRSP or TFSA?

When I set out to write this story, I thought it would finally prove my theory that TFSAs are better than RRSPs. Convinced that too many Canadians are distracted by the immediate tax deduction and potential tax refund offered by RRSP contributions, I wanted to show everybody the true potential of TFSAs. After years (decades, […]

Best RRSP Accounts and Rates in Canada for 2023

Best RRSP Accounts and Rates in Canada for 2023

Use these high-interest RRSPs to make contributions in the short term before deciding how to invest your retirement funds in the long term.

What You Should Know About RRSP Withdrawals

What You Should Know About RRSP Withdrawals

Funding a registered retirement savings plan (RRSP) is a solid option when you’re preparing for retirement. But that money will need to be withdrawn at some point, possibly before your RRSP fully matures. It’s important to understand how RRSP withdrawals work, because depending on when you access your money, you could wind up paying a […]

Back To Top