Understanding Registered Retirement Savings Plans (RRSPs)
A Registered Retirement Savings Plan (RRSP) is a powerful tool for securing your financial future. By allowing you to save on a tax-deferred basis, an RRSP helps you grow your retirement savings more effectively. Here’s what you need to know about the benefits and features of RRSPs:
- Your contributions are tax deductible
- You can contribute to your RRSP until December 31 of the year in which you reach age 71
- The income earned in your RRSP is not taxed until it is withdrawn, typically at a much lower rate during your retirement years
- Your allowable RRSP contribution is: 18% of previous year’s earned income or, up to the annual Canada Revenue Agency maximum ($31,560 2024 limit) less “pension adjustment”
- The Canada Revenue Agency will notify you of your current RRSP limit after they process your previous year’s tax return
Additional RRSP Opportunities: Home Buyer’s Plan
& Lifelong Learning Plan
Home Buyer’s Plan
Thinking of buying your first home? The Home Buyer’s Plan lets you use up to $60,000 of RRSP funds per spouse for your down payment. These contributions can save you up to $32,118 in taxes*. Just ensure contributions are made at least 90 days before withdrawal.
*based on highest combined Federal and Ontario marginal tax rate
Lifelong Learning Plan
Planning for education? The Lifelong Learning Plan allows you to withdraw $10,000 per year from your RRSP for your or your spouses education (up to a maximum of $20,000 each time you participate in the LLP). Similar to the Home Buyer’s Plan, this option allows you to benefit from tax savings while funding this major expense.
Book a Free Consultation Today
Contact us today to explore your RRSP options.