RRSP or Registered Retirement Savings Plan is a registered retirement savings plan that allows you to save money for your retirement while enjoying tax benefits. You can contribute up to a certain limit each year, and your contributions are tax-deductible. The money you invest in your RRSP grows tax-free until you withdraw it during your retirement.
Do I need a RRSP ?
An RRSP is an important retirement savings tool that can help you achieve your long-term financial goals. It provides a tax-efficient way to save for retirement, and the earlier you start contributing, the more you can benefit from the power of compound interest. With an RRSP, you can also enjoy tax savings today while deferring taxes until you withdraw your money during your retirement years.
What are the benefits of RRSP?
There are two main types of RRSPs:
- Individual RRSPs: These are RRSPs that you open and manage on your own. You can contribute up to 18% of your earned income from the previous year, up to a maximum amount set by the government.
- Group RRSPs: These are RRSPs that are offered by your employer as part of your benefits package. Your employer may also contribute to your RRSP on your behalf. Group RRSPs usually offer lower fees and a limited number of investment options.
Frequently Asked Question
The deadline to contribute to your RRSP is usually March 1st of each year. However, you can also carry forward unused contribution room from previous years.
Yes, you can withdraw money from your RRSP before you retire, but you will be subject to taxes and penalties. It’s important to consult with a financial advisor before making any withdrawals.
Your RRSP will be included in your estate and will be subject to taxes. However, you can name a beneficiary for your RRSP, which can help reduce the tax implications.
Yes, you can use your RRSP to participate in the Home Buyers’ Plan (HBP), which allows you to withdraw up to $35,000 tax-free to buy or build a qualifying home.