Spousal RRSP and Divorce in Ontario: Who Keeps It?

After a separation, people often ask who actually keeps a retirement account, and whether it is fair that one name appears on the statement while the money came from the other.

In Ontario, the question is mostly answered through equalization. This article explains how RRSPs count in the calculation, why the answer on tax is not a simple formula, and which CRA form is used to move an RRSP between spouses.

Equalization looks at value, not just whose name is on the plan

Equalization compares each spouse's net family property at separation with the net family property at the date of marriage. The spouse with the larger net increase pays half the difference to the other. The Ontario government lists retirement savings among the property counted in that calculation.

So the starting point is that RRSP value is counted. Whether anything changes because a plan is a spousal plan depends on your situation, so it is worth confirming with a lawyer who can look at your records.

Valuation dates and debts

Property owned at separation is valued as of the separation date, and property owned at marriage is valued as of the wedding date. For an RRSP, that means you need statements showing the balance on each date. Debts are subtracted from property values.

• Statements as of the date of marriage, if the plan existed then.
• Statements as of the date of separation.
• Records of contributions made during the marriage, and who made them.
• Any records showing whether the plan was set up as a spousal plan.

What about tax on the RRSP?

People often ask whether the value of an RRSP should be reduced to reflect tax. You may see round-number discounts quoted online. There is no single figure you can rely on, and whether and how tax is considered depends on the facts and on what the spouses or the court decide. This is a point to raise with a lawyer and an accountant before you agree to anything.

How tax rules apply to a spousal plan when funds are withdrawn depends on your situation, so an accountant can explain how they apply to you.

Rolling over RRSP money on breakdown

The CRA form T2220 is used to transfer all or part of an annuitant's RRSP or RRIF to the plan of a current or former spouse or common-law partner on breakdown of a marriage or common-law partnership. The same form also covers PRPP and SPP plans.

Before you rely on it, confirm with the financial institution and an accountant who needs to sign the form and what conditions apply to your situation.

What to do next

There is a time limit for a property claim. You must go to court within six years from the day you separated or two years from the day your divorce is final, whichever comes first.

• Gather RRSP statements for the date of marriage and the date of separation.
• Find contribution records, especially for any spousal plan.
• Do not withdraw funds before getting tax advice.
• Ask your financial institution about its process for a transfer on breakdown.
• Book time with a family lawyer and an accountant to review the numbers together.

Frequently asked questions