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RRSP

Registered Retirement Savings Plan

Are you concerned about the long-term effects of high government deficits? Worried that government and company pensions will be unable to provide an adequate income in your retirement years?

If you answered yes, welcome to the club. It means you are aware of the potential financial problems that could derail your retirement plans and lifestyle. It also means that you are already contributing to a Registered Retirement Savings Plan (RRSP). If you are not - you should be. We can help!

A Registered Retirement Savings Plan is a flexible, attractive savings tool. In addition to reducing your tax bill, it enables you to accumulate significant amounts and to defer income tax on your investment returns. The sooner you start saving, the more quickly your savings will start working for you.

Who Should Consider an RRSP? Any person under the age of 71 who has employment income.

Revenue Canada allows you to contribute, within limits, to an RRSP and claim a deduction from your income for the amount contributed. As much as 18% of your previous year's earned income, minus pension adjustments reported by employers, may be contributed.

  • RRSP Contribution Year: RRSP Contribution Limit:
    201524,930
    201625,370
    201726,010

You May Have Unused Contribution Room - this is the amount of allowable contribution you have accumulated if you have missed contributing up to your allowable maximum since 1991.

Spousal RRSP's - offer future tax relief when taxable retirement income is withdrawn from your registered plans. Total family income is then split into the two spouses' reduced income streams. In many cases, this will place both spouses in lower marginal tax brackets and may avoid clawback of government subsidies, such as Old Age Security.

Withdrawing RRSP Savings as Retirement Income - By the year's end in which you turn 71, you must convert your RRSP to a RRIF (or an annuity) and begin withdrawing your registered savings in the next year. If not converted, the whole RRSP will at once become taxable.

RRSP and RRIF Beneficiaries - Where applicable, consider naming your spouse, dependent child or dependent grandchild, rather than your estate, as beneficiary of your RRSP or RRIF. Assets may pass tax-sheltered upon death directly to the spouse's RRSP or RRIF or child's annuity.