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![]() imely
contributions to a Registered Retirement Savings Plan
(RRSP) are an essential part of a successful retirement
plan. Putting in a plan of action today can help ensure
you spend your retirement years in comfort.
What
is an RRSP?
RRSPs date back to 1975, when the federal government
decided to help individuals who lacked good pension
plans save money for their retirement. The concept behind
them is simple: if you agree to put some of your income
away for the future, you will not pay taxes on these
amounts until you withdraw them.
RRSP
Tax Incentives
RRSPs represent one of the most powerful strategies
available to Canadian tax payers. They offer two distinct
advantages: current tax savings resulting from the deduction
of contributions, and tax-free earnings on funds accumulating
in the plan. RRSPs allow you to deduct from taxable
income specified amounts contributed to you (or you
spouse's) plan. These amounts may then be invested and
the earnings accumulate in the plan tax-deferred. The
benefits if the tax deduction and the tax-deferred accumulation
allow for a bigger retirement pool than could be achieved
in an unregistered investment earnings the same rates
of return.
An
RRSP Loan- Helping You Reach Your Goals Sooner
A Secure retirement is arguably the most importance
of all financial goals, and the importance of RRSPs
in saving for retirement is clear. If you are behind
in your contributions, or if you have unused contribution
room, you may want to consider an RRSP loan. While interest
paid on an RRSP loan is not tax deductible, the tax
refund and tax deferred accumulation of income on this
amount can help you reach your goals sooner. The current
low interest rate environment makes this an ideal time
to consider such a loan.
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