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Tuesday Feb 21, 2017

Maximizing the Tax Efficiency of you RRSP

9 February 2010

rrspcash getty 02262007 150x150 Maximizing the Tax Efficiency of you RRSPThe 2009 season for your Registered Retirement Savings Plan (RRSP) is coming to an end with March 1st quickly approaching. You should be taking the time to save on tax while saving for the future you hope to have.

There are no other registered plan which offers tax advantages as compelling as your RRSP. With your annual contributions going to reduce the amount of tax you pay on income, but having your qualifies investments grow tax deferred within the plan until withdrawal, allowing you to be taxed at an even lower rate, you are definitely gaining by using your RRSP.

To help you further maximize the tax efficiency of your RRSP, try following the tips below.

1. Know your Contribution Limits

RRSP contributions are 18% of an individual’s earnings from the prior year. In recent years, RRSP contribution limits have been increasing by $1,000 each year, and 2011 will be the first year that the RRSP limit increase will be indexed to inflation.

2. Remember Other Uses of your RRSP

TTSPs can be used to invest in financial goals other than retirement, which include education or a first home. As a first time home buyer you can withdraw up to $25,000 tax free from an RRSP and repay the funds, interest free over a 15 year period. Keep in mind you have to repay or the money will be included in income.

3. Contribute as Often as you Can

If you can afford to contribute to an RRSP, do so. It is never too late to start contributing, and by starting early you can reduce any regret you may feel by not starting early enough. You can give yourself time to have your plan grow for the better. Making regular payments each month can make contributions a lot easier, but if you do find making lump sum payments throughout the year better, then do so.

About the Author

Sensei

My favorite weapon of choice is the samurai sword. I use it to cut my chicken during dinner, cut my hair and periodically carve my name into stone when I am bored. I love meditating on top of a 15ft high pole and eating those sushi’s with smoked salmon on top. I love everything there is about Canada and everything financially related to Canadians. I write deily posts from Canadian Banks to Credit Card information.

Comments (1 )



Bissy Wrote:

Wow this information sucks….. Nothing about USD or European stocks.

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