Spousal RRSPs have a spousal attribution rule that applies should you make withdrawals inside three years of your spouse’s contribution. This may end up in the withdrawals being taxable to the depositor again.
If you mix an RRSP and a spousal RRSP, the brand new account should be a spousal RRSP, whether you prefer it or not. Therefore, you’d typically roll an RRSP into the spouse’s existing RRSP.
Other than the attribution rules above, there aren’t any tax differences between an RRSP and a spousal RRSP on the subject of withdrawals.
Even should you separate or divorce, your spousal RRSP can’t be converted to a private RRSP.
As a result, Steve, your wife could mix her RRSP and her spousal RRSP by converting each right into a spousal RRIF. I can be inclined to achieve this.
Combining LIRAs with other registered accounts
Locked RRSPs have different withdrawal and consolidation rules than regular and spousal RRSPs. The lockout provisions of your wife’s locked-in retirement account (LIRA) are designed to forestall large withdrawals. These funds got here from a pension plan to which she was previously a member. Retirement funds are treated in a different way than personal retirement funds, allowing each maximum and minimum withdrawals from frozen accounts.
In some provinces, an account holder may have the opportunity to unfreeze their frozen account if the balance is below a certain threshold. This could apply to your wife Steve because you mentioned the account is small. Some provinces Also allow a one-time unlock of a portion of the account when converting a LIRA to a Life Income Fund (LIF), which is basically an RRIF equivalent of a LIRA.
As a result, Steve, your wife may have the opportunity to have some or all of her LIRA account rolled over to the identical RRIF as her RRSP and her spouse’s RRSP. If not, she’s going to should accept an RRIF and a LIF.
