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Trusted Regina Financial Experts share tip on RRSP Season

Trusted Regina’s Financial experts share their tip on RRSP season:

 

RRSP season is a great time of year for commissioned advisors. They are licking their chops waiting for you to run to them at the last minute to be sold another product to avoid tax, and they might sell you some insurance while they are at it...because why not! 

 

   

RRSP season rules:

- Be prepared before hand

- Don't let the tax tail wag the dog - do NOT do something you wouldn't do if it wasn't for the tax break

- Remember the deadline - March 3rd 2014

- Remember it can take time to move funds

- If you overcontribute by accident there is a $2,000 cushion (over this CRA hits you with a penalty)

RRSP Considerations & Opportunities:

- Do not forget this is deferring tax...you are going to pay this tax later when you withdraw from your RRSP

- If you have a company pension, farm income, land rental, rental property, or plan to work in retirement you may not actually be saving tax and should be using your TFSA.

- Think about contributing to your RRSP monthly rather than at the end of the year to take advantage of dollar cost averaging and avoid putting it on your line of credit.

- In Saskatchewan you have the choice between a regular RRSP or a Labour Sponsored Investment Fund (LSIF) which gives you an extra 35% tax back.

What is an RRSP? 

A Registered Retirement Savings Plan is a type of account for holding savings/investments in Canada. An RRSP is registered with the Government which allows your funds to grow tax free. Funds you place in your RRSP account are tax deductible when you move funds into the account, meaning you do not have to pay tax on the funds. Tax is charged on your RRSP once you remove it from the account in future years, preferably at a lower tax rate.

The main reasons individuals open RRSP accounts are:

- To save for retirement

- To take advantage of tax free growth in the RRSP

- Tax free contribution to your RRSP

- The ability to convert your RRSP to a Registered Retirement Income Fund (RRIF) which pays a monthly income like a pension in retirement

- Using a Spousal-RRSP to reduce tax and increase savings

- Savings for a house - utilizing the home-buyers plan (HBP)

- Savings for education - utilizing the Lifelong Learing plan (LLP

 

 

Trusted Regina’s Finance Experts -give them a call to see how they can work for you!

 

 

 

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