How to consolidate your registered accounts for retirement income in Canada

There’s a spousal attribution rule with spousal RRSPs that applies if you happen to take withdrawals inside three years of your partner contributing. This may occasionally end result within the withdrawals being taxed again to the contributor.

Whenever you mix an RRSP and a spousal RRSP, whether or not you prefer it or not, the brand new account have to be a spousal RRSP. Consequently, you’ll usually switch an RRSP into the prevailing spousal RRSP. 

There aren’t any tax variations between an RRSP and a spousal RRSP for withdrawals, aside from the aforementioned attribution guidelines. 

Even if you happen to separate or divorce, your spousal RRSP can’t be transformed to a private RRSP. 

Consequently, Steve, your spouse might mix her RRSP and her spousal RRSP by changing them each to a spousal RRIF. I might be inclined to do that. 

Combining LIRAs with different registered accounts

Locked-in RRSPs have completely different withdrawal and consolidation guidelines than common and spousal RRSPs. The locking-in provisions of your spouse’s locked-in retirement account (LIRA) are supposed to forestall giant withdrawals. These funds would have come from a pension plan she beforehand belonged to. Pension cash is handled in a different way from private retirement financial savings, such that locked-in accounts have most withdrawals in addition to minimal withdrawals. 

In some provinces, an account holder might be able to unlock their locked-in account if the steadiness is under a sure threshold. This may occasionally apply in your spouse, Steve, as you talked about the account is small. Some provinces additionally enable a one-time unlocking of a portion of the account whenever you convert a LIRA to a life revenue fund (LIF), which is actually a RRIF equal for a LIRA. 

Consequently, Steve, your spouse might be able to get some or all of her LIRA account transferred to the identical RRIF as her RRSP and spousal RRSP. If not, she must accept having a RRIF and a LIF.