Personal Finance

What is a Spousal RRSP, Contribution Limits, Benefits & How it Works?

Let’s delve into the intricacies of Spousal RRSPs and explore how this strategy can propel you towards your financial goals. In the realm of financial planning, one strategy stands out as a powerhouse for couples aiming to secure a prosperous retirement – the Spousal Registered Retirement Savings Plan (RRSP). This savings vehicle, often overlooked, holds the potential to revolutionize your financial landscape.

Understanding Spousal RRSPs

A Spousal RRSP, in essence, is a retirement savings plan where one spouse assumes the role of the annuitant, while the other contributes to the plan. The unique feature of this plan lies in its ability to balance income within a partnership, offering distinct advantages over individual RRSPs.

How Spousal RRSPs Works

Contributing to a Spousal RRSP allows you to invest in your spouse’s retirement. This becomes particularly advantageous when there is a significant income disparity between partners. The higher-earning spouse receives a tax deduction upon contributing, effectively reducing their tax bill. Simultaneously, the lower-earning spouse benefits during withdrawals, taxed at a potentially lower marginal rate.

Contribution Limits and Benefits

Understanding the contribution limits is crucial for optimizing the benefits of Spousal RRSPs.

Contribution Limits

As of 2023, your contribution limit is 18% of your 2022 individual earned income, up to $30,780, plus any carried-forward room from previous years. Importantly, your spouse’s contribution room remains unaffected by your contributions.

Benefits of Contributing

Income Splitting

A Spousal RRSP facilitates income splitting, a strategy that can substantially reduce the family’s overall tax burden in retirement. By diversifying income sources, you gain a powerful tool for tax optimization.

Additional Tax Breaks

Contributing to your spouse’s RRSP not only provides an immediate tax deduction for the contributor but also ensures that withdrawals are taxed based on the lower-income earner’s marginal rate. This double benefit enhances the overall tax efficiency of the strategy.

Frequently Asked Questions

Let’s address common queries to deepen your understanding of Spousal RRSPs.

Can a Personal RRSP be Transferred?

Funds can only be transferred between RRSPs owned by the same annuitant. Generally, you cannot transfer funds from a personal RRSP to a spousal RRSP.

Withdrawal Considerations

You can make withdrawals at your discretion, but they are included in income and subject to tax. It’s crucial to note that the annuitant, not the contributor, has the authority to make withdrawals.

Early Withdrawals

If the annuitant withdraws funds within three years of a contribution, that amount is added to the contributor’s taxable income for the year.

RRSP Contribution Deadline

For the 2023 tax year, the RRSP contribution deadline is February 29, 2024. Act promptly to maximize your contributions and optimize your tax situation.


In the intricate tapestry of retirement planning, Spousal RRSPs emerge as a powerful brushstroke, seamlessly blending tax efficiency and income optimization. Take charge of your financial destiny by exploring the untapped potential of Spousal RRSPs. Secure your future, amplify your wealth, and embark on a journey towards financial prosperity.