With pension income splitting, the higher-income spouse can allocate up to 50% of their eligible pension income to the lower-income spouse, including Registered Retirement Income Fund (RRIF) payments.

Before the government introduced this provision, a couple used a spousal Registered Retirement Savings Plan (RRSP) to save tax during retirement. The higher-income spouse makes tax-deductible contributions to mutual funds, and withdrawals are taxable to the lower-income spouse. Now, the question is whether a spousal RRSP still provides any benefits not available through pension income splitting.

Here are three situations when a spousal RRSP offers unique advantages.

Retiring before 65. You can only use RRIF income for pension income splitting when the RRIF owner is age 65 or older. However, if you retire before 65, the lower-income spouse can make withdrawals from a spousal RRSP or RRIF, taxable at their lower rate.

Earning income past 71. You must close your RRSP at age 71, but if your spouse is younger and you have earned income, you can contribute to mutual funds in a spousal RRSP until the end of the year in which your spouse turns 71.

Enhancing income splitting. Pension income splitting allows you to split up to 50% of eligible pension income, but when the higher-income spouse has income from other sources, this allocation isn’t always enough to equalize each spouse’s income. With a spousal RRSP or RRIF, you can withdraw any amount you wish to be taxable to the lower-income spouse.