Investing

Spousal RRSP question

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  • Mar 1st, 2017 2:32 pm
[OP]
Newbie
Dec 22, 2012
18 posts
2 upvotes

Spousal RRSP question

Hi All... Hoping someone can clarify.

I just opened Self directed RRSP for me and my spouse with TD direct investment. The Rep at the bank opened both personal RRSP & Spousal RRSP for both me and my wife. So a total of 4 accounts. I am the higher income holder and want to contribute to the spousal RRSP. Which account is the right account to deposit the money to. Is it my spousal RRSP account or my wifes spousal RRSP account?

The rep deposited the money into my wifes spousal RRSP account and he did check with a few others in the branch who confirmed that this is fine. Can someone confirm if this is the right account to deposit the RRSP contribution. Any one with similar experience, please advice.
20 replies
Deal Fanatic
Feb 4, 2015
6650 posts
2977 upvotes
Canada, Eh!!
Think that is right.

You, as higher earner, would get the deduction and your wife is owner of the contribution and pays tax when with draw from rrsp [as long as don't cash it early; attribution rules or something like that].

If you put in your spousal RRSP account then you still get deduction but you own funds and you are taxed when with draw from rrsp
.......
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2020: BOC dropped rates 3 times and MCAP waited and waited to drop its prime rate to include all 3 drops.
Jr. Member
Jun 15, 2013
184 posts
45 upvotes
VANCOUVER
There are two terms that are used for spousal RRSPs. Annuitant and contributor: http://wheredoesallmymoneygo.com/the-sp ... trategies/

Make sure you put the money in the spousal RRSP where your wife (lower income) is the annuitant, and you (higher income) are the contributor.

Your wife should see the money in your account, not you (unless you have trading authority and see all the accounts)
Sr. Member
Apr 23, 2008
518 posts
62 upvotes
Toronto
georvu wrote: Think that is right.

If you put in your spousal RRSP account then you still get deduction but you own funds and you are taxed when with draw from rrsp
Isn't putting into your spousal RRSP means your spouse (wife in this case) owns the fund and the RRSP would be taxed in her hands if she withdraws after 3 years? Am I missing something?
Deal Addict
Mar 10, 2011
2305 posts
418 upvotes
Toronto
Yes you did the right thing being the higher income earner and contributing to your wifes spousal rsp. You will get the tax deduction.
You probably didnt need to open a spousal rsp in your name unless you think at some point that your wife will be making more than you will.
Deal Fanatic
Feb 4, 2015
6650 posts
2977 upvotes
Canada, Eh!!
smehmood wrote: Isn't putting into your spousal RRSP means your spouse (wife in this case) owns the fund and the RRSP would be taxed in her hands if she withdraws after 3 years? Am I missing something?
Spousal rrsp in husband name: Wife can contribute and gets deduction. Husband owns and is taxed on withdrawals [after 3 years]

Spousal rrsp in wife name: Husband can contribute and gets deduction. Wife owns and is taxed on withdrawals [after 3 years]

Makes sense to contribute to that spousal rrsp owned by lower income earner so lower tax. In OP case this would be scenario 2
.......
July 13, 2017 to October 25, 2018: BOC raised rates 5 times and MCAP raised its prime rate next day each time.

2020: BOC dropped rates 3 times and MCAP waited and waited to drop its prime rate to include all 3 drops.
Sr. Member
Sep 12, 2012
766 posts
541 upvotes
Toronto
Question: If I contributed $1000 to my spousal RRSP 4 years ago and don't contribute again until today (February 27, 2017), am I allowed to withdraw the original $1000 contribution that I deposited from 4 years ago and have it taxed under my spouses name since that particular contribution has passed the 3 year mark? Or am I not allowed to withdraw any of the funds for another 3 years because I contributed to my spousal RRSP today?
Jr. Member
Feb 3, 2013
131 posts
52 upvotes
GREENWOOD, ns
hamandcheese wrote: Or am I not allowed to withdraw any of the funds for another 3 years because I contributed to my spousal RRSP today?
If you withdraw the funds they will be taxed in your hands. That's how I'm reading it. The new contribution would be considered withdrawn first, so I suppose if you took enough out then you would work your way to the original contribution and she would be taxed on that.

http://www.moneysense.ca/columns/super- ... thdrawals/
Sr. Member
Apr 23, 2008
518 posts
62 upvotes
Toronto
Can a person with zero or very low income have a personal or spousal RRSP account? I guess not since the person won't have contribution room for RRSP, correct?
Deal Addict
User avatar
Dec 14, 2007
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hamandcheese wrote: Question: If I contributed $1000 to my spousal RRSP 4 years ago and don't contribute again until today (February 27, 2017), am I allowed to withdraw the original $1000 contribution that I deposited from 4 years ago and have it taxed under my spouses name since that particular contribution has passed the 3 year mark? Or am I not allowed to withdraw any of the funds for another 3 years because I contributed to my spousal RRSP today?
If you deposited $1000 into the SRRSP today and your wife withdrew $1000, the income would be in YOUR name. You can NOT make any contribution for 3 calendar years, INCLUDING the year of withdrawal. http://www.cra-arc.gc.ca/tx/ndvdls/tpcs ... l-eng.html

This blog post makes it simple:
Rule #2: The tax on withdrawals from a spousal plan will be taxed in the planholder’s hands only if no contribution has been made to ANY spousal RRSP in the year of withdrawal or the two preceding calendar years.

If a contribution of any kind has been made during the year of withdrawal or the two preceding calendar years, anything contributed in that three-year window will be taxed in the contributor’s hands.
source: http://gailvazoxlade.com/blog/archives/4563

Sorry, I couldn't find the reference on the CRA site.

In other words, if your wife withdrew $1000 any time this year and you contributed $400 today any time this year, then:
$400 would be taxed as yours
$600 would be taxed as your wife's

ANYTHING you contribute on the YEAR of withdrawal and the 2 previous calendar years.
I'd love to write history... in advance.
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Dec 14, 2007
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sixcolors wrote: If you withdraw the funds they will be taxed in your hands. That's how I'm reading it. The new contribution would be considered withdrawn first, so I suppose if you took enough out then you would work your way to the original contribution and she would be taxed on that.

http://www.moneysense.ca/columns/super- ... thdrawals/
Yep. Exactly right. Don't contribute anything on the year of, or the previous two years. It's best to count backward with the Spousal RRSP from the end of the current calendar year, back 3 years.
I'd love to write history... in advance.
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Deal Addict
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Dec 14, 2007
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smehmood wrote: Can a person with zero or very low income have a personal or spousal RRSP account? I guess not since the person won't have contribution room for RRSP, correct?
They will have 18% of income up to a max of about $25,000... If they got a low income, they will have equally low contribution room.

Sorry... the RRSP is a tool mostly designed for the wealthy, and is essentially regressive taxation.

The TFSA is the more egalitarian tool ( ironic that public sentiment feels the opposite ) and is a better choice for low-income peeps anyhow,
I'd love to write history... in advance.
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Deal Guru
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Aug 8, 2012
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BC
smehmood wrote: Can a person with zero or very low income have a personal or spousal RRSP account? I guess not since the person won't have contribution room for RRSP, correct?
atomiton wrote: They will have 18% of income up to a max of about $25,000... If they got a low income, they will have equally low contribution room.
It depends what smehmood is asking.

"Spousal RRSP" can be ambiguous.

Yes, the low or zero income spouse can open a spousal RRSP account that the other spouse contributes to. You don't need any of your own contribution room to open a spousal RRSP account. The spouse who contributes to it needs the room and claims the deduction.
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Sr. Member
Apr 23, 2008
518 posts
62 upvotes
Toronto
ace604 wrote: Yes, the low or zero income spouse can open a spousal RRSP account that the other spouse contributes to.
Isn't this called my spousal account (I will contribute, spouse is the planholder) rather than my spouse's spousal account? Is my spouse personal RRSP account same as my spousal RRSP account?
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Dec 14, 2007
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smehmood wrote: Isn't this called my spousal account (I will contribute, spouse is the planholder) rather than my spouse's spousal account? Is my spouse personal RRSP account same as my spousal RRSP account?

With Spousal RRSPs, I find the terminology so confusing... but I've always called it MY Spousal RRSP. I chose to open it, I contribute to it... and I named the annuitant (my spouse) and in the end, by my contributions, I decide who gets taxed. But I see how someone can see it the other way.

In my brokerage account it sits under my account as well.

Legally, I've never looked into who OWNs the Spousal RRSP, that's an interesting question. Is it her account that I am contributing to, or is it my account that I'm naming an annuitant?
I'd love to write history... in advance.
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smehmood wrote:
Isn't this called my spousal account (I will contribute, spouse is the planholder) rather than my spouse's spousal account? Is my spouse personal RRSP account same as my spousal RRSP account?
atomiton wrote: With Spousal RRSPs, I find the terminology so confusing... but I've always called it MY Spousal RRSP. I chose to open it, I contribute to it... and I named the annuitant (my spouse) and in the end, by my contributions, I decide who gets taxed. But I see how someone can see it the other way.

In my brokerage account it sits under my account as well.

Legally, I've never looked into who OWNs the Spousal RRSP, that's an interesting question. Is it her account that I am contributing to, or is it my account that I'm naming an annuitant?
You chose to open it? Hmm. Which broker/bank was this?

Funny how the wording at the CRA is different:

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs ... ml#partner

(Note that "you" here is not matching your usage, assuming you are the higher income earner, "you" below is the low-income spouse ...) :D

"Spousal or common-law partner RRSP
An RRSP that you establish to pay yourself income at maturity that you or your spouse or common-law partner contributes to. Also, an RRSP that received amounts or transfers from any of your other spousal or common-law partner RRSPs or from your spousal or common-law partner RRIF.

Spouse
A person to whom you are legally married.
"
POLL: How frequent is your RRSP-matching?
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Deal Guru
User avatar
Aug 8, 2012
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atomiton wrote: With Spousal RRSPs, I find the terminology so confusing... but I've always called it MY Spousal RRSP. I chose to open it, I contribute to it... and I named the annuitant (my spouse) and in the end, by my contributions, I decide who gets taxed. But I see how someone can see it the other way.

In my brokerage account it sits under my account as well.

Legally, I've never looked into who OWNs the Spousal RRSP, that's an interesting question. Is it her account that I am contributing to, or is it my account that I'm naming an annuitant?
"Is it her account that I am contributing to, or is it my account that I'm naming an annuitant?" (I believe it's the bolded one, NOT the latter)

I'm quoting you again, because I'm REALLY curious which brokerage you did this with where your spouse's spousal RRSP account "sits under your account". It's her spousal account.
She can contribute to it as well as you. She should control the account.

Perhaps you signed extra forms/authorized trading permissions to link the account to your login?

This image describes it well enough:
Image

Everything I'm finding so far describes the annuitant as the 'owner' of the account.
POLL: How frequent is your RRSP-matching?
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Sr. Member
Sep 12, 2012
766 posts
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Toronto
atomiton wrote:
In other words, if your wife withdrew $1000 any time this year and you contributed $400 today any time this year, then:
$400 would be taxed as yours
$600 would be taxed as your wife's

ANYTHING you contribute on the YEAR of withdrawal and the 2 previous calendar years.
So basically, CRA uses the LIFO (Last In First Out) approach when it comes to Spousal RRSP withdrawals.
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Dec 14, 2007
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hamandcheese wrote: So basically, CRA uses the LIFO (Last In First Out) approach when it comes to Spousal RRSP withdrawals.
That's a pretty good way of thinking about it, yeah. Any withdrawal triggers a lookup. Current year + two years previous.

Code: Select all

╔══════╦═══════╦══════════╦═══════════════════════════════════╗
║ YEAR ║  DEP  ║ WITHDRAW ║                                   ║
╠══════╬═══════╬══════════╬═══════════════════════════════════╣
║ 2017 ║ $800  ║ $1500    ║ $900 contributor, $600 spouse     ║
║ 2016 ║       ║          ║                                   ║
║ 2015 ║ $100  ║          ║                                   ║
║ 2014 ║ $2000 ║          ║ (anything here and older is safe) ║
╚══════╩═══════╩══════════╩═══════════════════════════════════╝
I'd love to write history... in advance.
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