Spousal RRSPs: Contribution and Withdrawal Rules

A spousal RRSP allows the higher-earning person in a married or common-law couple to contribute to a retirement savings account in their partner’s name.

Many Canadians use a registered retirement savings plan, or RRSP, to save for retirement. A spousal RRSP is a similar version of this registered account designed for married couples and common-law partners. Depending on the couple’s financial situation, a spousal RRSP can have a huge impact on their shared tax burden.

What is a spousal RRSP?

A spousal RRSP is a registered retirement savings plan that is owned by one person — the annuitant or plan holder, but holds funds contributed by their spouse or common-law partner — the contributor.

Spousal RRSPs are particularly advantageous for couples where one partner makes significantly more than the other, and for couples where one partner is likely to be in a higher tax bracket than the other when they retire. They can also be useful for couples where the lower-income partner has several years before they turn 71, as an added benefit.

For example, let’s say one spouse is a high-income earner and contributes regularly to their RRSP, while the other is a stay-at-home parent. This could create a situation in which the first partner has a significant amount saved in their RRSP but pays a higher income tax rate, whereas the partner who stays home may be at a lower tax rate, but have a limited amount in their RRSP.

With a spousal RRSP, the higher-earning partner could contribute to retirement savings in the lower-income partner’s name and take the tax deduction on their own return — lowering their taxable income. This strategy could help the couple save for retirement in a more balanced manner and lead to lower combined taxes when they start withdrawing funds in their retirement years.

How spousal RRSPs work

Most major financial institutions offer spousal RRSPs for couples.

When you open the account, you’ll specify which partner is the contributor and which is the annuitant, a fancy word for recipient. Even though the contributor provides the funds, the annuitant owns the account and makes the investment decisions. They’re also the only person allowed to withdraw money from the account.

Contributions to a spousal RRSP count towards the contributor’s RRSP deduction limit, and don’t affect the annuitant’s deduction limit. It’s important for the contributor to make sure contributions to their own RRSP and the spousal RRSP don’t add up to more than their limit, or they’ll face RRSP over-contribution penalties.

Spousal RRSP vs. personal RRSP

A personal RRSP and spousal RRSP are two different accounts. You can have both, whether you’re the contributor or the annuitant. For example, if you’re the higher-earning spouse, you can have your own personal RRSP and contribute to a spousal RRSP for your partner, who can also have their own separate personal RRSP.

These RRSP accounts can be at different financial institutions of your choosing. However, you have only one pot of RRSP contribution room, which is based on the income you earned in the previous year plus any unused contribution room from prior years. You can find your RRSP contribution room in your CRA My Account or on your notice of assessment.

You can allocate that contribution room however you’d like between the two accounts, but be careful not to go over the limit. For example, if you have $10,000 of RRSP contribution room, you could contribute $5,000 to each plan, or you could contribute any combination of amounts that add up to $10,000 or less.

Spousal RRSP contribution rules

Spousal RRSP contribution limits are determined by the contributor’s overall limit. Opening a spousal RRSP does not give you additional contribution room.

RRSP contribution room is based on 18% of your previous year’s earned income, up to $30,780 for 2023. Any unused contribution room gets carried forward to future years.

Spousal RRSP withdrawal rules

A spousal RRSP must be converted to an registered retirement income fund, or RRIF, by Dec. 31 of the year the annuitant turns 71. The annuitant would then have to withdraw a minimum amount based on their age, which would be taxed at their marginal tax rate.

Early withdrawals from a spousal RRSP are allowed, but a three-year attribution rule applies. To avoid having the withdrawal taxed as part of the contributor’s income, the annuitant has to wait the remainder of the calendar year plus two full years after the last contribution before withdrawing funds.

Let’s say you contributed to a spousal RRSP in November 2022. Your spouse would have to wait until 2025 to make any withdrawals if you want the funds to be taxed as part of their income. If you made any contributions in 2023 or 2024, the clock would reset and you’d start the three-year wait again.

Contributors are not required to claim their spouse’s withdrawals as income in the following situations:

Withdrawals are made after the relationship ends.
Either spouse is no longer a resident of Canada.
The money is used for the Lifelong Learning Plan.
The contributor dies in the year of the withdrawal.

Spousal RRSPs can be complicated. If you think one might be useful for you and your partner, it’s a good idea to speak with a financial professional who can explain how the benefits and drawbacks may apply to your situation.

Benefits and drawbacks of a spousal RRSP

Like any retirement savings strategy, contributing to a spousal RRSP comes with advantages and disadvantages.

Benefits of a spousal RRSP

Immediate tax deduction. Contributions made to a spousal RRSP give the contributor an immediate tax break, lowering their taxable income.
Potential future tax break. When it’s time to withdraw funds from the accounts in retirement, splitting income between partners could mean a lower tax bill overall.
Home Buyers’ Plan. First-time homebuyers can borrow up to $35,000 from their RRSPs as part of the Home Buyers’ Plan. A spousal RRSP would allow couples to access up to $70,000.
Continued contributions. Taxpayers can’t contribute to their own RRSPs after Dec. 31 of the year in which they turn 71. However, they can continue to contribute to the spousal RRSP if their spouse is still to turn 71 and they have contribution room available.

Drawbacks of a spousal RRSP

Three-year attribution rule. Spousal RRSP contributions must stay in the account for the remainder of the calendar year plus two more years before being withdrawn as the annuitant’s taxable income. Withdrawals made within three years of the last contribution will be included in the contributor’s taxable income.
Home Buyers’ Plan and Lifelong Learning Plan withdrawals are exceptions to the rule, but the contributor can’t deduct contributions made within 89 days of a withdrawal under these plans.
Can be complicated if the relationship breaks down. Rules about shared finances, especially for common-law couples, differ between provinces. It’s important to seek professional advice from a financial advisor to help you navigate this complex process.

No, a spousal RRSP is designed to allow you to contribute to your partner’s retirement savings. You can contribute to a spousal RRSP for your partner and a personal RRSP for yourself, and your partner can do the same — though it typically makes the most sense for the higher-earning partner to contribute to a spousal RRSP in the lower-earning partner’s name, and not vice versa.

Tax deductions for contributions to a spousal RRSP are claimed by the contributor, and don’t affect the annuitant’s deduction limit.