THUNDER BAY – Money News – As many of you are aware, we are slowly creeping up on RRSP deadline so it’s a good time to provide you with some facts you may not already know of.
What is an RRSP?
RRSP stands for Registered Retirement Savings Plan. It’s the type of account that is used to defer taxes to later years. There are three simple things to know about RRSPs:
– Deposits are deductible against your taxable income
– Investment growth of your deposits is tax sheltered.
– RRSPs are only taxable when the money is withdrawn, allowing you to plan your income later in life tax efficiently.
How much can I contribute?
You are able to contribute 18% of your previous year’s income, to an annual maximum. If you haven’t contributed before you may have more contribution room. This information could be found on your annual notice of assessment letter sent to you in early Spring/Summer.
When is the deadline?
March 1, 2014. You have the first 60 days of each calendar year to make contributions that can be used to reduce your previous year’s income and taxes payable, or carry forward your deductions to future years.
What type of investments can I buy in an RRSP?
The type of investments you’ll be interested in will depend on your risk profile. Some of the more popular investment options are:
– Mutual funds
– Segregated funds
What are my options if I’m out of RRSP contribution room?
– Pay down any other consumer debt
– Open a TSFA (Tax-free savings account)
– Invest in tax-efficient investment vehicles (Corporate class mutual funds)
– Purchase a tax-sheltered life insurance policy (Ask me for details)
The Bottom Line
Consult with a professional to decide if an RRSP is right for you at this time. It may well depend on your current income and future income. If you should have any other questions regarding RRSPs, I invite you to contact me at your earliest convenience through my contact information below.
If you would like to sign up for my free monthly investment newsletter, feel free to email me at email@example.com with your name and email.
Anthony M. Talarico
Financial Security & Investment Representative
W: (807)343-4788 ext. 4248 C: 807-472-6092