Spousal RRSP: Rules, Benefits, and Tax Traps

A spousal RRSP is one of the cleanest “legal income-splitting” tools available to Canadian couples. It lets the higher-income spouse claim the RRSP deduction while building retirement income in the lower-income spouse’s hands. Done right, it can reduce lifetime tax, smooth retirement income between spouses, and help manage income-tested benefits.

In this in-depth blog post we cover:

• What a spousal RRSP is (and who does what)

• Why couples use spousal RRSPs (income splitting, lifetime tax)

• Contribution limits, deadlines, and over-contribution penalties

• The three-year attribution rule (the #1 tax trap)

• Withdrawals, withholding tax, and reporting (Form T2205)

• Planning for incorporated business owners (salary vs dividends)

• Age 71 planning: contributing when one spouse is older

• Using a spousal RRSP with the Home Buyers’ Plan (HBP)

• …and more!

Let’s dive in!

Thank You For Reading. See You Next Time!

Think Team🙏