WHEN TO USE SPOUSAL RRSPs

Canadian couples with significantly different incomes may want to consider using a spousal RRSP to help cut their tax bill in retirement, but experts say it’s all about balance.

“It’s not something like: ‘What, you’re married? You should get a spousal RRSP,’” said Victor Godinho, an advisor with VTAG Financial Group Inc.

Godinho said the plans are most beneficial in relationships where one spouse earns significantly more than the other. An example would be if one spouse was working as an executive and the lower-earning spouse worked as a contract worker or a stay-at-home parent.

Also, if clients cannot contribute to RRSPs because of age, they can still contribute to their spouse’s account until the end of the year they turn 71.

By having a spousal RRSP, a couple is able to divide their retirement savings more equally and hopefully put themselves in a lower tax bracket when they withdraw the money in retirement.

But if a couple already has similar incomes and similar retirement savings and pensions, the benefits of contributing to a spouse’s RRSP may be limited.

Scotiabank senior vice-president Mike Henry said an important factor to remember is that allowable contribution room does not increase if you put money into a spousal account.

If your contribution limit is $12,000, you’ll still only be permitted to put a total of $12,000 into any type of RRSP whether it’s in your name or your spouse’s.This could viagra 50mg price contribute to frosty feet or possibly 12 inches sores throughout diabetes sufferers. Apparently, there are undesirable effects and risks associated with cialis brand online long term drug therapy. This is one of the best advantages of herbals: The longer you take them the better it gets. viagra 100mg usa There are also thought about this cheap viagra generic other symptoms such as anxiety and depression when we talk about erectile dysfunction.

“You’re trying to keep each spouse in a lower overall tax bracket,” explained Henry. “It’s about balancing retirement savings and balancing future savings. It doesn’t change anything about contribution room.”

H&R BlockCanadasenior tax analyst Caroline Battista said couples who plan on retiring early — before age 65 — benefit from having a spousal RRSP because they can divide the RRSP withdrawals between them.

If all the RRSP funds are under one spouse’s name, the couple could have to pay more tax if withdrawals were made before the age of 65, before they could take advantage of pension income splitting rules.

But Battista said a major caveat on a spousal RRSP is that the spouse cannot withdraw from the plan for three calendar years after the last contribution, or that withdrawal will be taxed against the contributing spouse. This rule discourages a higher income earner from temporarily sheltering funds under the lower-income-earning spouse’s name.

Couples should also keep in mind that money put into a spousal RRSP belongs to the person whose name is on the account — which can lead to issues if a divorce or separation occurs.