Canadian couples looking to save money in retirement may turn to spousal RRSP accounts, though financial experts caution it might not work for everyone.
Aba Quarshie, a financial planner at RBC in Almonte, Ont., said in order for a couple to benefit from a spousal RRSP there generally need to be differences between the partners.
Advisers say typically, a higher income spouse makes a contribution to a spousal RRSP belonging to a partner in a lower tax bracket.While you cannot make RRSP contributions after the end of the year in which you turn 71, if you have a younger spouse and unused contribution room you can contribute to a spousal RRSP until the end of the year that your spouse turns 71.
Quarshie also noted that if one spouse dies with RRSP contribution room left, money can be put into a spousal RRSP for the surviving spouse. She said this ability has the benefit of reducing the deceased's final tax bill, which is often a substantial amount.
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