RRSP Tax Question

[Sylvanfan]

Originally Posted by fotze

A buddy just told me a technique that he is using but I am unclear. If you have a spouse with no income, but she has some money in RRSP's, can you withdraw that money (as long as its under the basic amount so as to not pay any taxes) and then re-contribute it and get the tax benefit?

Are you allowed to take it out and than re-contribute it to a spousal RRSP, or does it have to go into your own account? I must admit that I've never thought of that before, but I can't see why you couldn't do that.

[Slava]

There is no reason why this wouldn't work, but the RRSP issuer will hold back the with-holding tax on the withdrawal. Not the end of the world, but worth noting.

Also be forewarned that the RRSP contribution room is gone forever this way.