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in si de ha lto n. co m O ak vi lle B ea ve r | T hu rs da y, F eb ru ar y 6, 20 20 | 20 ©2020 California Closet Company, Inc. All rights reserved. Franchises independently owned and operated. Custom solutions for better living OAKVILLE 146 Lakeshore Rd E - NOW OPEN! TORONTO 1400 Castlefield Ave 800.274.6754 californiaclosets.ca Q: I plan on contributing to my RRSP as I always do, but wondered how it works if I also contribute to a spousal RRSP. Does this count to- wards my contribution limit, or my partner's limit? It is quite con- fusing. Could you let me know?fusing. Could you let me know?f George A: Dear George - RRSP Saver! RRSPs are Registered Retire- ment Savings Plans and a fabu- lous way to help you save for your future, ensuring your invested funds grow tax free until the withdrawal. Nowadays most peo- ple agree that we cannot base our retirement future on government pension allowances. Trying to live on a small government sub- sidized pension income would be virtually impossible for most Ca- nadians with debt. This is why planning and saving early is so important and RRSPs should be an integral part of everyone's in- vestment portfolio. Contributing to a spousal RRSP is a great way to even out the contributions so each partner has similar savings portfolios. We recommend this often when incomes are varied between cou- ples so that the higher income- earning spouse can contribute to the lower income-earning spouse's portfolio. The thing to remember is that any contribu- tions you make to your spouse's RRSP will be deducted from your RRSP limit and not your spouse's limit. The tax deduction is given to the contributor and would be limited to their personal CRA limit. Essentially this is a form of in- come-splitting between spouses and ensures that registered ac- count balances are kept fairly even for both partners. Once re- tired, each partner should plan to have approximately the same amount of income they are draw- ing out of their investments to en- sure they are in the same margin- al tax rate. One thing that you must keep in mind when you contribute to a spousal RRSP is the rule of attri- bution. If the spouse who re- ceived the contribution with- draws money from their RRSP during the year of the contribu- tion or up to and including the two preceding years, the contrib- uting spouse would be taxed. Now knowing this, make sure you do not contribute to a spousal RRSP if you are nearing retire- ment and foresee future with- drawals. I hope this helps, George. Don't forget; the RRSP deadline for 2019 contributions is March 2, 2020. Good luck and best wishes, Money Lady Written by Christine Ibbotson, Author of 'How to Retire Debt Free and Wealthy'. If you have a money question, please email on my website at: www.askthemo- neylady.ca. Follow me on Face- book and Instagram. ASK THE MONEY LADY: CAN YOU EXPLAIN HOW THE SPOUSAL RRSP CONTRIBUTION WORKS? OPINION ESSENTIALLY THIS IS A FORM OF INCOME SPLITTING, WRITES CHRISTINE IBBOTSON CHRISTINE IBBOTSON Column When filing your taxes, remember the tax deduction is given to the contributor and would be limited to their personal CRA limit. Metro Creative