Deadline: March 1st, 2023
Great benefits of opening an RRSP
A Registered Retirement Savings Plan (RRSP) is a simple, tax-advantaged savings account that allows you to save money for your retirement. It is registered with the federal government and offers several notable benefits. Here are five reasons to consider saving for your retirement with an RRSP.
- Tax-free investment: Your investment earnings in the RRSP are tax-free, allowing your savings to grow at a faster rate.
- Tax-deductible contributions: Your RRSP contributions are tax deductible and can be claimed as a deduction on your annual tax return. This can result in significant savings, especially for those in the highest tax bracket. Additionally, you can carry forward the allowance to future years if your income is lower in a given year.
- Spousal RRSP: You can save even more on taxes by opening a spousal RRSP, which allows you to combine your tax-free savings and equally split your retirement income between you and your spouse.
- Transferability: You can transfer your RRSP funds to an annuity or a Registered Retirement Income Fund (RRIF) at the time of your retirement, providing you with regular, staggered payments. Note that these payments will be taxed on a yearly basis.
- Withdrawal options: Under certain conditions, you can withdraw from your RRSP without paying tax. For example, you can withdraw up to $35,000 for a down payment on your first home or up to $20,000 for education costs (subject to funding rules).
If you have any questions or concerns about contributing to your RRSP, please don’t hesitate to contact us.
The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice in the context of your particular circumstances.
