Registered Retirement Savings Plans (RRSPs)

Contributing to an RRSP is still one of the most popular and tax-effective ways to save for your retirement. We have the products to build a portfolio to help you meet your retirement goals.

Contributing to an RRSP

To help Canadians save for retirement, the federal government makes tax allowances for those who contribute to registered plans.

You can save in 2 ways:

• Contributing money to an RRSP can lower your income in a particular year, so you defer paying taxes on that income.
• Once invested, your contributions grow tax-deferred. That means you don’t pay tax on any earned income or capital gains until you take it out.

Each year, Canadians may contribute up to 18% of their income, to a maximum of $20,000 (as of 2008). If you don’t contribute the maximum amount, you may accumulate the leftover room. Once contributed, the money becomes “registered.”

Withdrawing from an RRSP

Since you receive tax benefits from contributing to an RRSP, there are restrictions on withdrawals. To deregister or withdraw funds, you must pay tax, and any administrative fee or other fees associated with the investments.

However, in 2 instances¹ you may withdraw funds without taxes:

• Home Buyers' Plan – allows you to withdraw up to $25,000 from RRSPs to buy or build a qualifying home for yourself (as a first-time home buyer).

• You may still qualify as a first-time home buyer if you own a rental property or if you have not recently owned a home.
• You have to repay the withdrawal over a 15-year period or pay tax on it.

• Lifelong Learning Plan – allows you to withdraw money from RRSPs to finance training or education for you or your spouse or common-law partner. You cannot use the RRSP funds to finance a child's education.

• There is an annual limit of $10,000.
• The maximum amount you can withdraw is $20,000.
• You must repay the withdrawal over a 10-year period or pay tax on it.

RRSP investment options

You can hold segregated fund policies, mutual funds available through Quadrus Investment Services Ltd., and guaranteed interest options—in an RRSP.

Do you have unused RRSP contribution room? Taking out an investment loan to reduce your RRSP contribution room may improve your financial situation, both now and at retirement.

Under the rules governing registered retirement savings plans (RRSPs), you must collapse these plans by the last day of the year in which you turn an age set by legislation (currently age 71). We give you a number of income options.

¹information from Canada Revenue Agency website