Spousal Retirement Savings Plan (SRSP)

Spousal Retirement Savings Plan is an RSP that you contribute to for your spouse.   You are the contributor, (s)he is the Annuitant.  In other words, you make a contribution to an SRSP in your spouse’s name, you get the deduction from income but when the spouse redeems the funds the income is recognized in the spouse’s name.

Contributions are subject to your RRSP room, not your spouse’s as you are the one getting the deduction.   This can be a powerful income splitting tool for retirement.  In the past few years the government has introduced income splitting on retirement income making the SRSP seem obsolete but the government may take the income splitting away so it is still good practice to have retirement assets balanced between spouses.

All rules of RRSP apply to the SRSP. Redemption income will be recognized in your spouse’s hand. However, withdrawals of any contributions in the last 3 years will be taxed against you, the contributor.

Setting up spousal RSPs can be a powerful retirement income splitting tool if you are aware of the rules associated with them.  Are they right for your family?

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