Reference no: EM133205489

Mark and Jessica are married.  Mark earns $82,000 per year and has been a member of a defined benefit pension plan for the past 10 years.  He expects a pension of approximately $40,000 per year when he retires.  After taking years off to raise the kids, Jessica recently started an unincorporated small business and earns $30,000 per year.  This year, after paying all of their personal expenses, Mark has $5,000 in excess cash that he will not need in the near future. He has an RRSP balance of $20,000 and RRSP contribution room of $6,000. Jessica has an RRSP balance of $21,000 and RRSP contribution room of $8,000. Their main concerns are ensuring they maximize their after-tax income in retirement and are as tax efficient as possible now.  To address these concerns, the best alternative for Mark is to:

Identify the correct answer. For each answer, explain why it is either incorrect or correct.

1. Contribute $5,000 to Mark's RRSP
2. Contribute $5,000 to a spousal RRSP in Jessica's name
3. Contribute $5,000 to a TFSA in Mark's name 
4. Give $5,000 to Jessica so she can invest in her RRSP