{"id":494395,"date":"2026-02-23T16:11:09","date_gmt":"2026-02-23T16:11:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/494395\/"},"modified":"2026-02-23T16:11:09","modified_gmt":"2026-02-23T16:11:09","slug":"as-household-incomes-have-become-more-even-spousal-rrsps-are-turning-into-a-strategic-tool","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/494395\/","title":{"rendered":"As household incomes have become more even, spousal RRSPs are turning into a strategic tool"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

A spousal RRSP might be a way to mitigate higher tax bills for clients who find themselves with larger-than-expected income in a particular year.Igor Suka\/iStockPhoto \/ Getty Images<\/p>\n

Many couples no longer use spousal registered retirement savings plans to even out their marginal tax rates, but some advisors say there\u2019s still a place for them in specific client situations. <\/p>\n

Traditionally, spousal RRSPs were used to reduce a higher-earning spouse\u2019s net income and build retirement savings for the non- or lower-earning spouse, says Alex Spence, associate vice-president, advanced wealth planning, at Wellington-Altus Financial Inc. in Winnipeg. <\/p>\n

But he says more couples now eschew spousal RRSPs, which require more complex planning and tax projections, in favour of individual RRSPs to lower their respective net incomes. <\/p>\n

And if they choose to retire after 65, they take advantage of the 50-per-cent income splitting allowed from their converted registered retirement income funds (RRIFs) or defined-benefit pension plans to equalize their money.<\/p>\n

\u201cThere\u2019s less awareness around spousal RRSPs, as a smaller portion of the population will benefit from them,\u201d he says. \u201cThat\u2019s also reinforced by more households having two income earners.\u201d<\/p>\n

A \u2018strategic tool\u2019<\/p>\n

Mr. Spence says spousal RRSPs are now used more as a \u201cstrategic tool\u201d in specific cases. For example, a spousal RRSP might be a way to mitigate a higher tax bill for clients who find themselves with larger-than-expected income in a particular year. <\/p>\n

For example, Laura Whiteland, certified financial planner (CFP) at Inclusive Financial Planning in Truro, N.S., recently used a spousal RRSP for a client who faced a big tax hit after selling a second property and incurring significant capital gains. The client, who was the higher-earning spouse, already had a large RRSP. <\/p>\n

She says the client made a spousal RRSP contribution for the lower-earning spouse. As a result of the contribution, the higher-earning spouse lowered their net income and avoided the tax hit from the property sale. <\/p>\n<\/p>\n

\u201cWhen you\u2019re dealing with larger sums of money, it\u2019s a way to shift money to the spouse\u2019s balance sheet,\u201d she says. <\/p>\n

Spousal RRSPs have attribution rules that prohibit withdrawing money from the account for three calendar years, Ms. Whiteland says. Money withdrawn earlier will be taxed as income to the spouse who made the contribution.<\/p>\n

Early retirement<\/p>\n

Spousal RRSPs are also worth considering if the couple plans to retire before 65. To qualify for RRIF or pension income-splitting, the spouse doing the income transfer must be 65 or older. <\/p>\n

If one spouse has more taxable income and assets, Mr. Spence says, the lower-earning spouse could withdraw a portion of retirement funds from a spousal RRSP and be taxed at their lower marginal tax rate (as long as the three-year attribution period has passed). <\/p>\n

Aravind Sithamparapillai, CFP at Ironwood Wealth Management Group in Fonthill, Ont., says many of his midwife clients will retire early. <\/p>\n

\u201cThe job is demanding, with on-call schedules and shift work, which gets more challenging as you get older,\u201d he says.<\/p>\n

The goal when managing those client households is to ensure each spouse\u2019s RRSP has a similar value. <\/p>\n

\u201cIf [most of their retirement] money is tied up in one spouse\u2019s RRSP, it becomes a planning issue,\u201d he says.<\/p>\n

Among his clients, the midwives typically are the primary breadwinners, so they\u2019re interested in shifting some income to the lower-earning spouse using a spousal RRSP. <\/p>\n

In some cases, one spouse wants to work longer than the other. If the working spouse\u2019s RRSP is considerably larger, Mr. Sithamparapillai says, she could contribute to a spousal RRSP to even out the amount her spouse has in their RRSP, while still getting a tax deduction.<\/p>\n

\u201cThis works predominantly when there\u2019s a massive differential in tax brackets,\u201d he says.<\/p>\n

Another spousal RRSP strategy is converting the plan to a spousal RRIF before the higher-earning spouse retires at 65, Mr. Spence says. This strategy can be used in cases in which the attribution rules would apply to withdrawals from a spousal RRSP, with the income taxed to the contributing spouse.<\/p>\n

With a spousal RRIF, the attribution rules don\u2019t apply for mandatory minimum withdrawals, Mr. Spence says. <\/p>\n

However, if withdrawals exceed the mandatory minimum, that amount will be taxed back to the spouse who made the contribution, he adds. <\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: A spousal RRSP might be a way to mitigate higher tax bills for…\n","protected":false},"author":2,"featured_media":494396,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[1397,45,49,48,133,5266,2922,131,132],"class_list":["post-494395","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-appwebview","tag-business","tag-ca","tag-canada","tag-finance","tag-globe-advisor","tag-noastack","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/494395","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=494395"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/494395\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/494396"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=494395"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=494395"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=494395"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}