An individual RRSP is an account that is registered in your name. The investments held in the RRSP and the tax advantages associated with them belong to you. A spousal RRSP is registered in the name of your spouse or common-law partner. They own the investments in the RRSP, but you contribute to it. You get the tax deduction for any contributions you make to a spousal RRSP. Any contributions you make reduce your own RRSP deduction limit for the year.
The spouse can use the funds after a certain time period. You use it to split income in retirement, which lowers the tax you have to pay. That means the combined income tax Income tax A charge you pay based on your total income from all sources.
The Canadian government and your province set the rate. Spousal RRSPs are used to equalize retirement income and minimize tax. Some employers offer group RRSPs as a benefit Benefit Money, goods, or services that you get from your workplace or from a government program such as the Canada Pension Plan. However, you may pay fees on the individual investments you choose for your plan. Mutual funds, for example, will charge management fees.
By doing this, your RRSP can bypass your estate and go directly to your named beneficiary when you die. Be aware that naming anyone other than a qualified spouse or partner can have serious tax implications. An advisor can help you set up your RRSP and decide which investments to put in it.
They can also answer questions you may have about RRSPs or any other financial product. To get started, talk to a Sun Life advisor today. What is an RRSP? RRSP calculator. Subscribe to the Brighter life newsletter. This article is meant to only provide general information. Sun Life Assurance Company of Canada does not provide legal, accounting, taxation, or other professional advice.
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