Registered Retirement Savings Plan (RRSP)
A Registered Retirement Savings Plan (RRSP) is a government approved program that is designed to encourage Canadians to save for their retirement by providing tax reduction options. The tax breaks are twofold:
- Contributions to an RRSP are deductible from taxable income.
- Income and capital gains generated by the investments in the RRSP are sheltered (that is, you don’t pay tax on the growth).
The government sets annual limits on the amount that can be contributed to an RRSP; currently the allowable contribution limit is 18% of income earned in the previous year, to a maximum of $20,000. Your RRSP deduction limit is shown on the Notice of Assessment which is sent by the Canada Revenue Agency (CRA) after your tax return is processed.
Maximum RRSP deduction limits are as follows:
- 2008 - $20,000
- 2009 - $21,000
- 2010 - $22,000
After 2010, the RRSP dollar limit will be indexed to the growth in the average industrial wage.
Once you have determined the amount of money you can contribute to your plan, the next decision is where to invest. There are many options including equities, mutual funds, Treasury Bills, bonds, stripped coupons, GICs, real estate and mortgages. Since January 1, 2005, you are allowed foreign property in RRSPs with no limit. This allows more international diversification opportunities for retirement investments.
If you don’t have the cash available for this year’s contribution, we can help you arrange a loan. This way you won’t miss out on the opportunity to increase your retirement fund.
The deadline for contributing to an RRSP is usually the 60th day after the end of the year. However, when a deadline would otherwise fall on a Saturday, Sunday or statutory holiday, the deadline is moved to the next business day.
Registered Retirement Savings Plan (RRSP)
A Registered Retirement Savings Plan (RRSP) is a government approved program that is designed to encourage Canadians to save for their retirement by providing tax reduction options. The tax breaks are twofold:
- Contributions to an RRSP are deductible from taxable income.
- Income and capital gains generated by the investments in the RRSP are sheltered (that is, you don’t pay tax on the growth).
The government sets annual limits on the amount that can be contributed to an RRSP; currently the allowable contribution limit is 18% of income earned in the previous year, to a maximum of $20,000. Your RRSP deduction limit is shown on the Notice of Assessment which is sent by the Canada Revenue Agency (CRA) after your tax return is processed.
Maximum RRSP deduction limits are as follows:
- 2008 - $20,000
- 2009 - $21,000
- 2010 - $22,000
After 2010, the RRSP dollar limit will be indexed to the growth in the average industrial wage.
Once you have determined the amount of money you can contribute to your plan, the next decision is where to invest. There are many options including equities, mutual funds, Treasury Bills, bonds, stripped coupons, GICs, real estate and mortgages. Since January 1, 2005, you are allowed foreign property in RRSPs with no limit. This allows more international diversification opportunities for retirement investments.
If you don’t have the cash available for this year’s contribution, we can help you arrange a loan. This way you won’t miss out on the opportunity to increase your retirement fund.
The deadline for contributing to an RRSP is usually the 60th day after the end of the year. However, when a deadline would otherwise fall on a Saturday, Sunday or statutory holiday, the deadline is moved to the next business day.