Gordon Powers

With most of the family's RRSP money in a spousal plan, one reader wonders what happens if that spouse passes away?

When the owner of an RRSP dies, the full value of the RRSP is generally included in the deceased's income. However, where the beneficiary is the surviving spouse, the RRSP can be rolled over to his or her account on a tax-deferred basis - bypassing the estate and reducing probate costs. This means the surviving spouse won't have to pay tax on the funds until they're withdrawn.

Another worried spouse wants to know what happens if her husband suddenly takes money out of their spousal RRSP that she's been contributing to.

It all depends on whether the two of you are getting along: If the withdrawal is part of a planning strategy because one of you has hit a low-income year, great. But if it's merely a cash grab or done to spite someone during a rough patch, the effect can be devastating.

If you have little or no other income this year, then a withdrawal to take advantage of a lower tax bracket can make sense, particularly where you're willing to invest that money outside the RRSP in a TFSA. But someone forging ahead on their own could hurt you.

Withdrawals from a spousal plan are normally declared as income by the spouse who is the holder of the plan. However, if you've made spousal contributions in the year of the withdrawal - or in either of the two preceding years, even if it wasn't the particular spousal plan from which the funds are being withdrawn - you'll have to declare the amounts withdrawn by your husband and pay tax on them.

Couples who are on the same page can shrink the waiting period for withdrawals to closer to two years (plus a day) by making their spousal contributions by December 31 each year.

How long can I defer my RRSP contributions, asks another procrastinator. If I can't afford to put money in now, does the limit keep growing?

If you're unable to use any part of the RRSP deduction limit, the amount is carried forward to the next year and added to the deduction limit for that year. Any part that you don't use can be carried forward indefinitely. This wasn't always the case, however, and there are those that worry about the federal government changing the rules down the road.

Why do I have so little RRSP room this year, wonders one puzzled investor.