A spousal RRSP is a Registered Retirement Savings Plan where one spouse contributes using their own RRSP room, but the account is registered in the other spouse’s name. The contributor gets the tax deduction. The other spouse eventually withdraws the funds and pays tax at their lower rate.
How a Spousal RRSP Works
The contributing spouse uses their own contribution room — it does not create additional room. Contributions reduce the contributor’s taxable income. Withdrawals are taxed in the annuitant’s hands as long as no contributions were made in the current year or the two preceding calendar years.
Why It Matters in Retirement
Most valuable when one spouse will have significantly higher retirement income. By building assets in the lower-income spouse’s name, the couple can equalize retirement income, reduce OAS clawback exposure, and lower the household’s combined tax rate.
Related Resources
This article provides general financial education for Canadians. It is not personalized financial advice. For guidance specific to your situation, consider speaking with a CFP professional.