A Registered Retirement Savings Plan (RRSP) is a government-recognized investment vehicle that benefits from legislation that makes it both tax deductible and tax free.

What you put in, you get back

The contributions you make each year to your RRSP can be deducted from your taxable income meaning you pay less tax.

Your money grows for free

The money you put into your RRSP and the interest you earn are not taxed.  You are only taxed when you begin to make withdrawals from your RRSP.  Ideally, that will be when you are retired and you will be in a lower tax bracket.

You can always reach the max

Legislation establishes the maximum you can contribute to your RRSP per year however, if you can’t contribute the maximum in a given year you can carry forward the amount you did not contribute to a year when you do have the money.  It is also possible to secure short-term loans or lines of credit to top up your RRSP in a given year.  Many people do this and then pay down the loan of line with their tax return.

It’s not just for retirement

It is always best to start an RRSP as soon as you start working full time.  The longer you contribute to your plan the more money you will have for your retirement.  But that’s not the only reason to start early.  The Homebuyers’ Plan (HBP) allows first time homebuyers to make tax-free RRSP withdrawals of up to $25,000 to purchase a home. You will then have 15 years to make equal instalment contributions back to your RRSP to replace the funds you withdrew under the program.

There are many ways to use and maximize an RRSP.  We have experts who can help you develop a plan that works for you.