The Reminder is making its archives back to 2003 available on our website. Please note that, due to technical limitations, archive articles are presented without the usual formatting.
They certainly sound complicated, but spousal RRSPs are a simple way for couples to help each other financially. "A spousal RRSP provides many benefits to a couple, particularly if one partner is expected to earn substantially more in retirement than the other," says Heather Clarke, Director of Advanced Financial Planning Support at Investors Group. A spousal RRSP allows the partners to even out their combined retirement income, which can lead to significant tax savings. "Spousal RRSPs let you split your income so you pay less tax, while still enjoying all the benefits of a regular RRSP. It's a win-win on both fronts," Clarke says. Here's how a Spousal RRSP works: Each partner has a maximum contribution limit. The federal government will have notified you of your 2004 RRSP limit when they sent your Notice of Assessment for 2003. The spouse with the anticipated higher retirement income can put any portion of their RRSP contribution into a spousal RRSP for the benefit of their partner. Contributions to a Spousal RRSP are tax deductible for the contributor. The RRSP limit of the spouse who benefits from the spousal RRSP contribution is not affected. That means the lower-earning spouse can still make his or her maximum RRSP contribution. The major benefit of a Spousal RRSP is that when the lower-income spouse withdraws money from the registered plan at retirement, income will likely be taxed at a lower marginal tax rate than if it were taxed to the higher-income spouse. If you are not already maximizing your contribution, talk to your financial advisor about ways to increase your contribution and better plan for retirement. It's also a good idea to spend the time to go over your entire financial picture and help draw up a unique RRSP solution tailored to your specific needs. For financial planning and investment information visit www.investorsgroup.com This column, written and published by Investors Group Financial Services Inc., is presented as a general source of information only and is not intended as a solicitation to buy or sell investments, nor is it intended to provide professional advice including, without limitations, investment, financial, legal, accounting or tax advice. For more information on this topic or on any other investment or financial matters, please contact your financial advisor.
