R.R.S.P.s

A Registered Retirement Savings Plan (RRSP) lets you build tax-deferred retirement savings.

You can deduct your RRSP contributions from your taxable income, and your investments grow sheltered from tax until you make a withdrawal.

Ten common RRSP mistakes - click here

Is an RRSP for you?

If you are like most Canadians, you need to rely on your own savings to fund the retirement lifestyle you want. If you have earned income, an RRSP is one of the most tax-efficient solutions.

How RRSPs work

Canada Revenue Agency prescribes an annual maximum amount based on a percentage of your earned income. To find out how much you can contribute, check your Notice of Assessment from Canada Revenue Agency.

Eligible RRSP investments include cash, guaranteed deposits, segregated and mutual funds, stocks and bonds.

Your RRSP contributions are deducted from your earned income for that year and your investments in an RRSP grow sheltered from tax.

You can withdraw from your RRSP at any time, provided your RRSP is not locked-in under pension legislation. The amount you take out is added to your income in the year of withdrawal.

When you turn 71, you have to close your RRSP. You have three options at this point:

• Transfer your investments to a RRIF
• Use the funds to by an Annuity
• Cash in your investments and claim the entire amount as income.

Key Features and Benefits

Immediate tax deductions

Every dollar you contirubte to an RRSP, within your RRSP contirbution limit, reduces your earned income for that year. This reduces the amount of tax you pay and is especially beneficial if you are in a high marginal tax bracket

Tax-sheltered growth

The investment growth in your RRSP is sheltered from tax. That means you don't have to pay taxes on interest, dividends or capital gains from your RRSP investments while the funds remain in the RRSP.