You will be able to split pension income with your spouse at any age provided the pension is a defined benefit plan. Otherwise you must wait until you are age 65. Income from a RRIF can only be split if the annuitant (the person entitled to the payments) is over age 65. If you are planning on retiring at age 65, then a spousal RRSP would not be of any benefit.

With respect to spousal RRSP contributions, if you contribute to a spousal RRSP, you take the tax deduction and your wife is the beneficiary of the plan. From a tax deduction point of view it doesn’t matter if you contribute to your own RRSP or your spouse’s.

I hope this helps!

She has an RRSP of about 500,000. I have about less than half that.

To balance things out I have been thinking about having my wife make a spoulal rrsp contribution into my account this year.

I am wondering, however, whether it is worth the trouble, as I don’t think it will make any difference now, given the income splitting rules.

Am I missing something do you think?

thanks Joe

Let me try to state it: the higher earning spouse can contribute to a spousal rrsp. But, I believe that is only up to her own contribution limit. What then becomes of the possible contrbution room of the other spouse.

Say, for instance, that my wife has the right to put $10,000 in an RRSP and I have the right to put $1000. She puts $1000 in mine and $9000 in her own. Well, it seems like we are losing out on the possibility of me putting in my $1000. In other words we put in a total of $10,000 when we could have had the right to put in $11,000.

Hope this is clear and looking forward to your answer.
joe

Once you reach age you’ll be able to split RRIF payments and pension plan income (other than CPP).

In the mean-time, the income splitting options available are somewhat limited. If you have any investments outside an RRSP, you should structure your affairs so that the investments are held in the lower income spouse’s name.

For new investments, have the lower income spouse do all of the investing. The income from the investments will be taxed in the lower income spouse’s hands.

For any existing investments, you may consider selling the investments to the lower income spouse at the current fair market value. The lower income spouse must pay for the investments with his or her own funds (i.e. the higher income spouse cannot gift the money to the lower income spouse). If the lower income spouse does not have the funds, the higher income spouse may take a note as payment: The note must pay interest at the prescribed rate (currently 1%) and the interest must actually be paid within 30 days after the end of each year.

Some options may be available should you own a small business corporation but beyond that there would be few if any opportunities.

A straight RRSP withdrawal does not qualify for pension income splitting.

Only income that qualifies for the pension income tax credit qualifies. Your wife may be able to create pension income by converting a portion of her RRSP to a RRIF. The RRIF income would qualify and can be split.

Thanks ,
Craig Auld