Comments on: How SPOUSAL RRSPs Work http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm Building Wealth through Saving and Investing Sat, 21 Nov 2009 03:00:37 -0500 http://wordpress.org/?v=abc hourly 1 By: DK http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm/comment-page-2#comment-105140 DK Mon, 14 Sep 2009 15:46:38 +0000 http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm#comment-105140 Sharon, You should have your husband confirm with his former employer that the funds can be transferred to an RRSP in your name (i.e. you are the annuitant) before you go to the trouble of opening a spousal RRSP. Other than that there should be no problem with your plan. Sharon,

You should have your husband confirm with his former employer that the funds can be transferred to an RRSP in your name (i.e. you are the annuitant) before you go to the trouble of opening a spousal RRSP. Other than that there should be no problem with your plan.

]]> By: FrugalTrader http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm/comment-page-2#comment-105103 FrugalTrader Fri, 11 Sep 2009 23:55:18 +0000 http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm#comment-105103 Sharon, providing that your family can open a spousal RRSP and have the RRSP room, I don't see why you can't deposit some of the severance money into a spousal RRSP. Sharon, providing that your family can open a spousal RRSP and have the RRSP room, I don’t see why you can’t deposit some of the severance money into a spousal RRSP.

]]> By: Sharon Monahan http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm/comment-page-2#comment-105102 Sharon Monahan Fri, 11 Sep 2009 23:35:56 +0000 http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm#comment-105102 Hi, My husband will soon receive a large severance package of which a portion is eligible for direct transfer to rrsp's and the remainder can be transferred also as he has enough rrsp room. As I am in a much lower tax bracket we would like to transfer an amount to a spousal rrsp.(with the hope that we could withdraw after two years and pay less taxes). Is this possible? Thank you. Sharon Hi,
My husband will soon receive a large severance package of which a portion is eligible for direct transfer to rrsp’s and the remainder can be transferred also as he has enough rrsp room. As I am in a much lower tax bracket we would like to transfer an amount to a spousal rrsp.(with the hope that we could withdraw after two years and pay less taxes). Is this possible?
Thank you. Sharon

]]> By: FrugalTrader http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm/comment-page-2#comment-90424 FrugalTrader Sun, 05 Jul 2009 11:53:49 +0000 http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm#comment-90424 Rais, a spousal RRSP is totally separate than your wife's personal RRSP. My understanding is that when you contribute to a spousal RRSP, it will reduce "your" RRSP contribution limit, but you get the tax deduction. Rais, a spousal RRSP is totally separate than your wife’s personal RRSP. My understanding is that when you contribute to a spousal RRSP, it will reduce “your” RRSP contribution limit, but you get the tax deduction.

]]> By: Rais http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm/comment-page-2#comment-90371 Rais Sun, 05 Jul 2009 01:34:44 +0000 http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm#comment-90371 Hi, My most recent Notice Of Assessment shows my RRSP limit as $20,000 and my wife's Notice Of Assessment shows her RRSP limit as $1,500. Is it possible that I pay $21,500 ($20,000 for myself and $1500 for spousal RRSP) and get a tax deduction on $21,500? All the discussions above say that if I pay for my wife's RRSP, my contribution room will get reduced. Does it mean, that I can pay a maximum of $20,000 irrespective of whether its going towards my RRSP or my wife's RRSP? Thanks Hi,

My most recent Notice Of Assessment shows my RRSP limit as $20,000 and my wife’s Notice Of Assessment shows her RRSP limit as $1,500.
Is it possible that I pay $21,500 ($20,000 for myself and $1500 for spousal RRSP) and get a tax deduction on $21,500?

All the discussions above say that if I pay for my wife’s RRSP, my contribution room will get reduced. Does it mean, that I can pay a maximum of $20,000 irrespective of whether its going towards my RRSP or my wife’s RRSP?

Thanks

]]> By: Moe http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm/comment-page-2#comment-82316 Moe Tue, 12 May 2009 22:57:01 +0000 http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm#comment-82316 FT, being married definitely helps in the finances department, as is proven by the Economist. http://www.economist.com/daily/chartgallery/displayStory.cfm?story_id=13636078 FT, being married definitely helps in the finances department, as is proven by the Economist. http://www.economist.com/daily/chartgallery/displayStory.cfm?story_id=13636078

]]> By: Dk http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm/comment-page-2#comment-72031 Dk Fri, 27 Feb 2009 16:47:54 +0000 http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm#comment-72031 And then of course I would file a T1213 with CRA along with proof of the 2009 contribution so that I get the benefit of the contribution sooner, and invest THAT in my TFSA since I've already maxed out my RRSP for 2009. See here for the CRA form: http://www.cra-arc.gc.ca/E/pbg/tf/t1213/README.html And then of course I would file a T1213 with CRA along with proof of the 2009 contribution so that I get the benefit of the contribution sooner, and invest THAT in my TFSA since I’ve already maxed out my RRSP for 2009. See here for the CRA form:

http://www.cra-arc.gc.ca/E/pbg/tf/t1213/README.html

]]> By: Dk http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm/comment-page-2#comment-72027 Dk Fri, 27 Feb 2009 16:19:31 +0000 http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm#comment-72027 buyertime, If I were in your situation I would figure out what my 2009 contribution room will be (I believe QuickTax will do this for you) and contribute that amount now into the spousal. buyertime,

If I were in your situation I would figure out what my 2009 contribution room will be (I believe QuickTax will do this for you) and contribute that amount now into the spousal.

]]> By: buyer1time http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm/comment-page-2#comment-71900 buyer1time Thu, 26 Feb 2009 16:47:08 +0000 http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm#comment-71900 My situation is somewhat similar related to what DK/RC had mentioned. I have already put in 25K into RRSP to take advantage of HBP. I opened a spousal RRSP and put in the 7K which maxes out my contribution room. My spouse opened a RRSP and put in her max amount which was only 1K. My question is since my Spouse and I could only put in 8K into spousal/her RRSP how can I somehow benefit by putting in additional amount into my spousal RRSP to make it 25K so that we could benefit taking out a totak of 25K + 25K for HPB Note : We were planning to buy a house at towards the end of the year. My situation is somewhat similar related to what DK/RC had mentioned. I have already put in 25K into RRSP to take advantage of HBP. I opened a spousal RRSP and put in the 7K which maxes out my contribution room. My spouse opened a RRSP and put in her max amount which was only 1K.

My question is since my Spouse and I could only put in 8K into spousal/her RRSP how can I somehow benefit by putting in additional amount into my spousal RRSP to make it 25K so that we could benefit taking out a totak of 25K + 25K for HPB

Note : We were planning to buy a house at towards the end of the year.

]]> By: Traciatim http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm/comment-page-2#comment-71705 Traciatim Tue, 24 Feb 2009 23:10:49 +0000 http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm#comment-71705 Ankur, though every situation is different and I'm not sure what you are using the RRSP for in the future (IE, buying a house etc), but it probably makes sense for both of your contributions come from your income in this case, as more tax would be reduced. You have to keep in mind the attribution rules if you are planning on using this money in the near future. Ankur, though every situation is different and I’m not sure what you are using the RRSP for in the future (IE, buying a house etc), but it probably makes sense for both of your contributions come from your income in this case, as more tax would be reduced.

You have to keep in mind the attribution rules if you are planning on using this money in the near future.

]]> By: ankur http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm/comment-page-2#comment-71559 ankur Tue, 24 Feb 2009 04:01:48 +0000 http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm#comment-71559 hi, i have to make a contribution to RRSP say approx 6000 and for my wife approx 1500, will it be beneficial to have spousal rrsp or shall we contribute individually, my income is 46K and my wife's income is 10K, please advice hi,
i have to make a contribution to RRSP say approx 6000 and for my wife approx 1500, will it be beneficial to have spousal rrsp or shall we contribute individually, my income is 46K and my wife’s income is 10K, please advice

]]> By: FrugalTrader http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm/comment-page-2#comment-71026 FrugalTrader Thu, 19 Feb 2009 14:03:18 +0000 http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm#comment-71026 dm, i'm not sure about the separation issue and taxes, but the contribution room is based on you, not your spouse. dm, i’m not sure about the separation issue and taxes, but the contribution room is based on you, not your spouse.

]]> By: dm http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm/comment-page-2#comment-70989 dm Thu, 19 Feb 2009 04:40:23 +0000 http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm#comment-70989 My wife and I have an amicable separation involving young children. I turn 65 next year and am wondering if I can purchase a spousal RRSP even though we are living separately. She is not working and could cash it in in 3 years as part of child support, while I could benifit from the tax break as I intend to continue working. As well, if this is possible, am I correct in assuming that she must have RRSP room for me to do this? My wife and I have an amicable separation involving young children. I turn 65 next year and am wondering if I can purchase a spousal RRSP even though we are living separately. She is not working and could cash it in in 3 years as part of child support, while I could benifit from the tax break as I intend to continue working.

As well, if this is possible, am I correct in assuming that she must have RRSP room for me to do this?

]]> By: DK http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm/comment-page-2#comment-69092 DK Wed, 04 Feb 2009 22:54:53 +0000 http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm#comment-69092 RC, You do not have to wait 3 years to withdraw from spousal RRSP under HBP. If you are the higher earner and have more contribution room, your spouse should open a spousal RRSP - he will be the annuitant, you will be the contributor. Your strategy should be for you to contribute to your spouse's spousal RRSP AND your individual RRSP until both are at $25,000 (the maximum allowed to be withdrawn under the HBP) which will give you $50,000 of down-payment money, while ensuring you get the maximum possible tax deduction. I am currently employing a similar strategy. RC,

You do not have to wait 3 years to withdraw from spousal RRSP under HBP. If you are the higher earner and have more contribution room, your spouse should open a spousal RRSP – he will be the annuitant, you will be the contributor.

Your strategy should be for you to contribute to your spouse’s spousal RRSP AND your individual RRSP until both are at $25,000 (the maximum allowed to be withdrawn under the HBP) which will give you $50,000 of down-payment money, while ensuring you get the maximum possible tax deduction.

I am currently employing a similar strategy.

]]> By: RC http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm/comment-page-2#comment-68978 RC Tue, 03 Feb 2009 21:16:43 +0000 http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm#comment-68978 I've read through all the scenarios and had a quesion. I am interested in using a spousal RRSP to save money for a house. If I contribute to my spouses RRSP; then I can still reduce my tax rate; but my spouse's contribution room stays the same. The source from Desjard's bank shows that you don't have to wait the 3yrs to withdraw for the HBP. Is there some other source that can show this is true? If I buy RRSPs for myself; and give my spouse money to buy his own; then it will take much longer to get the full amount under HBP (his contribution room is much less; and so is his income) Would it be better to max out on his contribution room and then use my room for his rrsp? Appreciate the help! I’ve read through all the scenarios and had a quesion.
I am interested in using a spousal RRSP to save money for a house. If I contribute to my spouses RRSP; then I can still reduce my tax rate; but my spouse’s contribution room stays the same.
The source from Desjard’s bank shows that you don’t have to wait the 3yrs to withdraw for the HBP. Is there some other source that can show this is true?
If I buy RRSPs for myself; and give my spouse money to buy his own; then it will take much longer to get the full amount under HBP (his contribution room is much less; and so is his income)
Would it be better to max out on his contribution room and then use my room for his rrsp?
Appreciate the help!

]]> By: cannon_fodder http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm/comment-page-2#comment-68709 cannon_fodder Sat, 31 Jan 2009 14:48:48 +0000 http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm#comment-68709 Lostman/DAvid, I almost never disagree with DAvid, but I will this time. Because you have a pension and your wife does not, I suggest that your wife does not contribute to an RRSP but rather a TFSA. In fact, you could give her the money to put into a TFSA. If you are going to put any money into an RRSP it should be a spousal RRSP in order to balance out your retirement incomes somewhat. I wouldn't be able to suggest whether you should first put $ into a spousal RRSP first and then into a TFSA because I don't have enough information. However, if forced to, my recommendation would be maximum contributions to TFSA's for both of you first, and then if you have any money left over, contribute to a spousal RRSP. This will give you signficant non-taxable income in retirement and, according to the experts, RRSP's are only preferred for those in higher income tax brackets that also reinvest the tax refunds from the RRSP's (which could be applicable to you, but not your wife due to her $25k income). Perhaps this calculator might help (it's not ideal since it doesn't allow you to put in info for both you and your spouse so you will likely have to run the scenarios for both you and your wife separately and combine the results) - http://www.taxtips.ca/calculators/tfsavsrrspcalculator.htm Lostman/DAvid,

I almost never disagree with DAvid, but I will this time.

Because you have a pension and your wife does not, I suggest that your wife does not contribute to an RRSP but rather a TFSA. In fact, you could give her the money to put into a TFSA.

If you are going to put any money into an RRSP it should be a spousal RRSP in order to balance out your retirement incomes somewhat.

I wouldn’t be able to suggest whether you should first put $ into a spousal RRSP first and then into a TFSA because I don’t have enough information. However, if forced to, my recommendation would be maximum contributions to TFSA’s for both of you first, and then if you have any money left over, contribute to a spousal RRSP.

This will give you signficant non-taxable income in retirement and, according to the experts, RRSP’s are only preferred for those in higher income tax brackets that also reinvest the tax refunds from the RRSP’s (which could be applicable to you, but not your wife due to her $25k income).

Perhaps this calculator might help (it’s not ideal since it doesn’t allow you to put in info for both you and your spouse so you will likely have to run the scenarios for both you and your wife separately and combine the results) -
http://www.taxtips.ca/calculators/tfsavsrrspcalculator.htm

]]> By: FrugalTrader http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm/comment-page-2#comment-68705 FrugalTrader Sat, 31 Jan 2009 13:12:46 +0000 http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm#comment-68705 Metta, the spousal credit is for situations just like yours. I've written an article about it here: http://www.milliondollarjourney.com/spousal-amount-uccb-and-cctb.htm Metta, the spousal credit is for situations just like yours. I’ve written an article about it here:
http://www.milliondollarjourney.com/spousal-amount-uccb-and-cctb.htm

]]> By: Metta http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm/comment-page-2#comment-68688 Metta Sat, 31 Jan 2009 01:30:44 +0000 http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm#comment-68688 Hi, Can someone explain dependent/spousal credit? I have heard about tax credit for dependents, but not for no income spouses. I have no idea of what it is but it might apply to me. I'm a stay home mom with no income except the universal child care benefit and interests earned from our savings. My husband makes about 85K annually. He contributes to spousal RRSP. He's a lawyer so he will be much higher income than I. Thanks so much. Hi,
Can someone explain dependent/spousal credit? I have heard about tax credit for dependents, but not for no income spouses. I have no idea of what it is but it might apply to me. I’m a stay home mom with no income except the universal child care benefit and interests earned from our savings. My husband makes about 85K annually. He contributes to spousal RRSP. He’s a lawyer so he will be much higher income than I. Thanks so much.

]]> By: DAvid http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm/comment-page-1#comment-67886 DAvid Thu, 22 Jan 2009 01:18:35 +0000 http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm#comment-67886 LostMan, Do you mean you want to use the small amount of RSP room you have left after your company pension contribution reduces it, thus lowering your taxes, or do you want to give money to your wife so she can use up all the accumulated RSP allowance she has from years past, thus possibly reducing her tax payable to zero for the next few years? Spousal RSP uses your contribution room to fund a spouses RSP. You might want to look at a combination of options, to reduce both of your taxes payable to the greatest amount possible -- maybe it's time to play with some tax software, or contact a tax wiz! I suggest contributing fully to your RSP to get the tax break, and maxing your wife's by putting as much as yo can into it, and claiming enough each year to get the best tax benefit for her. DAvid LostMan,
Do you mean you want to use the small amount of RSP room you have left after your company pension contribution reduces it, thus lowering your taxes, or do you want to give money to your wife so she can use up all the accumulated RSP allowance she has from years past, thus possibly reducing her tax payable to zero for the next few years?

Spousal RSP uses your contribution room to fund a spouses RSP. You might want to look at a combination of options, to reduce both of your taxes payable to the greatest amount possible — maybe it’s time to play with some tax software, or contact a tax wiz!

I suggest contributing fully to your RSP to get the tax break, and maxing your wife’s by putting as much as yo can into it, and claiming enough each year to get the best tax benefit for her.

DAvid

]]> By: LostMan http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm/comment-page-1#comment-67880 LostMan Thu, 22 Jan 2009 00:05:22 +0000 http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm#comment-67880 Hey I wonder if you could give me some advice?I am 42 years old wife is forty one.I make 65000 a year she makes 25000.We just paid of our mortgage, and want to start an RRSP for her(I have a company pension)she has none.Should I contribute to spousal RRSP? Hey I wonder if you could give me some advice?I am 42 years old wife is forty one.I make 65000 a year she makes 25000.We just paid of our mortgage, and want to start an RRSP for her(I have a company pension)she has none.Should I contribute to spousal RRSP?

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