RRSP time

Hmm.... One of them lazy days. So the only thing I can do is work! But before I go do... ugh... manual labour, let me post.

Dear Munnybagz,
Can you talk about spousal RRSPs during 2007 if both people have room to contribute. And how it impacts on the husband's taxes and if it impacts the wife's at all.

First off, any money you put into a company RRSP is untaxed. You don't need a spousal RRSP if you're both maxing your company RRSP contributions. But other than that, any contributions are good. If only one person is contributing, that will not end up as enough!
Remember, any money that you can save is good. It's better to be able to double your RRSP contributions than have a latte every day. I'm kind of going off track here, but it's good to stress the point that you should always contribute if you can. But it's always better to max your company RRSP contributions first.

This response has been brought to you by Fractals by an 11 Year Old!

1 comment:

Anonymous said...

To add a little depth to the reply...

First of all, the whole point of spousal RRSPs is to even out retirement income (thus taxes) for spouses. Generally you contribute to a s.rrsp if you make significantly more money than your spouse (ie. your spouse is a homemaker). Like Munnybagz said, if you both max your rrsps, there isnt anything to contribute to. Note that if you contribute to a s. rrsp, you take away from your own contribution room.

As for "always max your rrsp", many will argue not to do this as maxing your mtg payments is also important. There is no answer as to which is better. It comes down to what you expect your ROI to be and your risk tolerance.