Tax Tip: RRSP

RRSP (Registered Retirement Savings Plan) is a personal savings plan with tax benefits. It can hold various qualifying investments, like stocks, bonds, mutual funds, etc. Your contributions will be
tax deductible and any growth will be
tax-deferred

As an example, let’s say you start withdrawing money from your RRSP after you retire at age 65. At this point in your life, you may be in a lower tax bracket. This means you’ll be paying less tax than you would if you with withdrew money from your RRSP in your 30s or 40s.

RRSP can also help you:
buy your first home with the RRSP Home Buyer’s Plan,
go back to school with the RRSP Lifelong Learning Plan, or
split your income with a spouse or common-law partner with a spousal RRSP.

How much can you contribute to an RRSP?
The Notice of Assessment that the Canada Revenue Agency (CRA) sends to you each year after processing your tax return shows your RRSP contribution limit.
Generally, its 18% of your previous year’s earned income to the maximum amount set each year by the Income Tax Act and Regulations, plus any unused contribution room carried forward from past years.

By the end of the year you turn 71, you’re required by law to close down your RRSP.

Early withdrawals from RRSPs come with some major costs.

Want to learn more? Let’s talk.