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3 types of RRSPs

3 types of RRSPs | RRSPs | GetSmarterAboutMoney.ca
3 types of RRSPs
A brief look at how individual, spousal and group RRSPs work.
The most common type of RRSP is an individual plan that you open for yourself. If you
are married or have a common-law partner, you can also open a spousal RRSP. Another
option is joining a group RRSP if your employer o ers this type of plan.
1. Individual RRSP
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.
You can choose to build and manage your RRSP investment portfolio yourself with a selfdirected RRSP or work with an advisor.
2. Spousal RRSP
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. They won’t a ect how much your spouse can
contribute to their own RRSP.
A spousal RRSP is a way for you and your spouse to split your income more evenly in
retirement. That means the combined income tax you pay as a couple may be lower
than what you would pay if all your savings were in a single RRSP. You may want to do
this if you earn more money than your spouse and you’re likely to be in a higher tax
bracket when you both retire. Or if you have a pension plan and your spouse doesn’t.
To qualify for a spousal RRSP, you must:
3 types of RRSPs | RRSPs | GetSmarterAboutMoney.ca
have lived together as a couple for at least 12 months,
have a child together by birth or adoption, or
share custody and support of your partner’s children from a previous relationship.
If your spouse takes out money you have contributed:
within 3 years of the contribution date – you’ll have to pay tax on the withdrawal
3 years after the contribution date – your spouse will pay tax on the withdrawal
If your relationship ends:
if you are married – spouses generally have to divide assets equally
if you are living common-law – consider drafting a joint agreement to cover this
situation as assets may not necessarily have to be divided equally.
Spousal RRSPs are used to equalize retirement income and minimize tax. It doesn’t make
sense to open a spousal RRSP if your spouse’s income will be roughly equal to yours when
you retire.
3. Group RRSP
Some employers o er group RRSPs as a bene t to help employees save for retirement.
You open an individual RRSP, but you contribute to it through your employer. The RRSPs
of all of the employees are held at the same nancial institution. Here’s how it works:
Your plan contributions are usually automatically deducted from your pay. Your
employer may match or add to your contributions.
Your employer usually pays the costs of opening and managing the plan. You pay any
investment costs.
The range of investment options is usually limited, depending on where the group
RRSP is held.
The rules for when and how much money you can take out of the plan vary
depending on your employer.
3 types of RRSPs | RRSPs | GetSmarterAboutMoney.ca
Understand how your particular group RRSP works. The choices and rules vary
depending on your employer and where the plan is held. Learn more about group
Think about opening a spousal RRSP if you earn more money than your spouse and are
likely to be in a higher tax bracket when you retire.
Your employer may make contributions to your RRSP if you join a group plan. They may
also pay some of the plan’s fees.
Last updated January 30, 2018
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