GUEST COLUMN: Benefits exist

Aspousal RRSP is the same as a regular RRSP, except that the former is registered in your spouse’s name

Aspousal RRSP is the same as a regular RRSP, except that the former is registered in your spouse’s name while you, as the contributing spouse, take a full tax deduction for all the contributions you make to the spousal plan.

Spouse includes a common-law partnership, meaning a common-law partner can make a spousal RRSP contribution if the couple has lived in a conjugal relationship for at least one year or five years together and have a child.

Deposits made to a spousal RSP cannot exceed your personal contribution limit, but your contribution can be made to a spousal RSP, your personal RSP, or split between the two accounts.

Furthermore, deposits made to a spousal RSP do not affect your spouse’s RSP contribution limit for the year.

The primary benefit for using a spousal RSP is future income splitting, usually around retirement.

The assets in a spousal RSP are deemed to be those of the plan holder, or annuitant, which in this case is your spouse.

When funds are withdrawn from the spousal RSP, they are taxed in the hands of your spouse, at his/her marginal tax rate.

Hence, the most advantageous scenario for a spousal RSP occurs when the plan holder would otherwise have little retirement income, while the contributing spouse would have a significant amount of income.

Please be advised that there are a few restrictions on spousal RSP withdrawals: in order for withdrawals to be taxed in the hands of the plan holder, the contributor must not have made any contributions into the spousal plan in the year of the withdrawal, or the two preceding years.

Generally, if there will be a big discrepancy between your retirement income and that of your spouse, you should consider a spousal RSP.

Kirbey Lockhart is an investment advisor with RBC Dominion Securities in Vernon. This article is provided for information purposes only. Please consult with a professional advisor before implementing a strategy.

 

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Morning Start: High heels were first designed for men

Your morning start for Monday, Aug. 10, 2020

Spall golfers sizzle

Countback needed to determine low gross winner in first flight

Coldstream provincial park trail gets assessment

Vernon Search and Rescue, BC Parks, assess trail on Kal Lake Provincial Park’s east side

Vernon Vipers add experience to roster

Western League veteran joins Snakes, who also sign player out of prep hockey

Vernon rink back to defend B.C. men’s curling title

Jim Cotter, Rick Sawatsky, Steve Laycock and Andrew Nerpin will seek a third straight championship

53 new COVID-19 cases, no new deaths cap off week of high infection rates in B.C.

Roughly 1,500 people are self-isolating because they either have COVID-19 or have been exposed to it

Mitchell’s Musings: Hockey’s comeback begins in earnest in August

Sports is back. Well, at least sports in a bubble is back.… Continue reading

1 year since a B.C. teen died in a skate park, his family still waiting for charges

Carson Crimeni’s final moments were broadcast on social media

NHL playoffs: Canucks to meet St. Louis Blues in Round 1

Vancouver takes on defending champs beginning Wednesday

Local state of emergency declared near Okanagan home

Slope failure cited as City of Penticton issues notice at home in 600 block of Heather Road

Simon Cowell breaks his back falling from electric bike

Incident happened at his home in California

VIDEO: Internet famous Yukon-based bhangra dancer explores Vancouver Island

Gurdeep Pandher spreads joy through dance, forms cross-cultural connections amid pandemic

Fentanyl-laced powder being sold as cocaine in Kamloops

Interior Health has released a warning about very strong fentanyl in Kamloops

Unofficial holidays: the weird and wonderful things people celebrate around the world

On any given day of the year, there are several strange, silly or serious holidays to observe

Most Read