Here are some basic facts that will help you get the most into and out of your RRSP.
- Be deadline driven This year, the contribution deadline for RRSPs is February 29, 2012 – don’t miss it!
- Be a maximizer Always make your maximum contribution each year – you’ll get the most in immediate tax savings and in long-term growth. How much you can personally contribute can be found on your most recent notice of assessment from the Canada Revenue Agency (CRA).
- Play catch up Fill up unused contribution room fast. You can do that in a single year or over a number of years until you reach age 71 – but quicker is better.
- Match savings to income As you make more money, make larger contributions to your RRSP and you’ll have more income in retirement.
- Consider borrowing to save An RRSP loan can be a good thing to maximize this year’s contribution or catch up on past contributions – but only if you can get one at a low interest rate and pay it back as quickly as possible. Even better: use your RRSP tax savings to help pay off the loan.
- Choose a beneficiary Designate a beneficiary for your RRSP (in Québec, this must be done through a will). Generally, RRSP assets do not form part of your estate and do not attract probate fees. If your beneficiary is your spouse/partner or a disabled child/grandchild, your RRSP can be transferred tax-deferred to your beneficiary’s registered plan.