RRSP/RRIF


Registered Retirement Savings Plan (RRSP):

  • Allows you to save for the future on a tax-deferred basis
  • 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  • The income earned in your RRSP is not taxed until it is withdrawn, typically at a much lower rate during your retirement years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 for the current year is the lower of:
  • (1) 18% of your earned income (salary, wages, rental income, alimony, etc.) from the previous year; or
    (2) the maximum annual contribution limit for the taxation year.

  • The Canada Revenue Agency will notify you of your current RRSP limit after they process your previous year’s tax return

Home Buyer’s Plan

    When preparing or contemplating the purchase of your first home, an excellent option to consider is the Home Buyer’s Plan. This plan allows you to use RRSP funds, up to $25,000 per spouse, towards your down payment or any costs incurred in conjunction with your first home purchase. These RRSP contributions can save you up to $11,500 (income tax at 46%) versus saving up the money outside of an RRSP. The Home Buyer’s Plan requires the contributions predate the withdrawal towards home purchase by at least 90 days.

Lifelong Learning Plan

    For your own or a spouse’s education savings, the RRSP Lifelong Learning Plan (LLP) enables you to draw $10,000 per year from your RRSP to put towards your education. Similar to the Home Buyers Plan, this option allows you to benefit from tax savings while funding this major expense.

 

Registered Retirement Income Fund (RRIF):

  • Designed to provide retirees with a source of income after they retire
  • Usually comprised of the funds that roll over from an RRSP, as an RRSP cannot be kept after the year in which the plan holder turns 71

  • The funds in a RRIF can only be sourced from another RRIF, an RRSP, or another pension plan

  • The capital and earnings in a RRIF accumulate tax-free, but is subject to tax upon withdrawal

  • Any amount of money can be withdrawn from the fund at any time, but any amount over the minimum will be subject to various degrees of withholding tax

Saving for Your Retirement

    “How much is enough?” is likely to be a question near the top of your list when considering retirement savings. A Tradex advisor can provide a detailed, no-obligation plan that will meet your retirement goals.

    Here are some of the common investment options for your retirement:

  • Mutual Funds

  • Segregated Funds

  • Guaranteed Minimum Withdrawal Plans

  • Principle Protected Notes

  • Annuities

  • Once you retire, you can establish a regular income stream from your investments on a tax-friendly basis. For optimal results, discuss the many options available with your Tradex advisor.

Term Life Insurance

    As you transition to retirement, you may wish to review your term coverage needs. This is a good time to sit down with a professional financial planner to rebalance your coverage based on your reduced needs for debt coverage and replacement income. This is also an excellent time to assess estate planning opportunities.

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