Video: How to find the best online account + MORE Feb 13th

Spousal RRSP withdrawal rules: Timing matters 

Tom, the rules around the timing of spousal registered retirement savings plans (RRSPs) can be confusing. If you don’t time the withdrawal correctly it may be taxed in your name rather than your spouse’s name, which is not what you want.

Let me see if I can clear this up for you and then I’ll give you some ideas on why a spousal RRSP is a good income splitting tool.

To answer your question, when you make a spousal RRSP contribution you have to wait two full calendar years, with no contributions, before you can make a withdrawal that is taxed in your spouse’s hands.

In your case, Tom, you made a contribution in Dec. 2019. You didn’t make a contribution in 2020 or 2021 which means if your spouse draws from the spousal account in 2022, he/she will be taxed on the withdrawal, not you as the contributor…

Watch: How to find the best online bank account.

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Find out your current tax-free savings account (TFSA) contribution limit by using this calculator. Note that in the second box below, you should not “double count” contributions that you have withdrawn and then legitimately re-contributed in the following calendar year or beyond, as this could lead to a false over-contribution warning.

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