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Less-used spousal RRSPs may still benefit some couples

This comes in handy when the couple turns 65, when they can split the income. If the low-income spouse needs to withdraw certain funds, they will also be taxed at the lower-income level.

He added that the higher-earning spouse who contributes to the plan also receives “really good” tax benefits, even if the funds are in the name of the lower-earning spouse.

Dick said having a spouse’s RRSP is also useful for couples who are first-time home buyers.

“If the higher earning spouse sets up his or her RRSP and one spouse sets up an RSP, the couple can borrow from both of them for the home buyer’s plan,” she said.

Once the fund is more than three years old, people can borrow $35,000 tax-free from each RRSP — as long as they pay it off within fifteen years — for their first home. If the fund is less than three years old, they will have to pay tax on that withdrawal.

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