Planning withdrawals from a spousal RRSP

The main goal of planning as a couple is income splitting for withdrawals, where you have to respect the "three year rule".

The contributing spouse cannot invest in the other spouse's RRSP during the year of withdrawal or in the two previous calendar years (the contribution dates count, not the deduction year). Thus, when the spouse is ready to make a withdrawal, it is best to contribute before the end of the calendar year instead of in the following 60-day period. For example, if a spouse contributes $2,000 to a spousal RRSP in February 2005, and the recipient withdraws before 2008, the contributing spouse will be taxed up to $2,000 on the withdrawals, even if the February 2005 contribution was deducted for the 2004 taxation year. The same contribution made in December 2004 would mean that the recipient is taxed on withdrawals made before 2007.