Why should I invest in an RRSP?

An RRSP allows you to save during your prime income earning years, tax-deferred, for when you are retired and will have little or no income. The two main benefits of an RRSP are that they provide you with a tax break, and the investment can grow without tax consequences until you retire.

When is the best time to start an RRSP?

Today. The sooner you start your RRSP portfolio, the more you will have when you retire. Contact us and speak with one of our financial advisors to get started.

Can I - or should I - borrow for an RRSP?

It often makes sense to borrow for an RRSP, especially if your rate of return can match or beat your borrowing rate. You can then use your tax return to pay off or pay down your RRSP loan. You can take advantage of a reduced borrowing rate with an RRSP Loan, which features rates as low as Prime +0.5%.

When is the contribution deadline?

The deadline for contributing to an RRSP for the 2018 tax year is March 1, 2019.

What's my maximum allowable contribution limit?

Your allowable RRSP contribution is the lower of the following:

• 18% of your earned income from the previous year
• The maximum annual contribution limit for the taxation year ($26,010 for 2018)
• The remaining limit after any company-sponsored pension plan contributions, plus, your unused contribution room.

Your unused contribution room is shown on your Notice of Assessment or Notice of Reassessment for the previous tax year. If you don’t have that handy, you can call the automated Tax Information Phone Service (T.I.P.S.) at 1.800.267.6999, or the individual income tax enquiries line at 1.800.959.8281. You will be asked for your Social Insurance Number, your date of birth, and the total income you reported on line 150 of your income tax return for the previous year.

You can also use the online Canada Revenue Agency My Account service. Before you can access the service for the first time, you must register for an epass. Once you've registered and received your password, you can sign in and access your RRSP Deduction Limit Statement online.

Can I contribute more than the maximum allowed?

Yes. You can actually contribute up to $2,000 more without penalty. This is called the over-contribution limit. If you exceed this over-contribution limit, you will be subject to a 1% monthly penalty tax on the amount above $2,000 (unless the exceeding amount is tax deductible on your previous year's tax return).

What if I didn't maximize my RRSP deduction in years past?

Now is a great time to try and catch up. If you haven't claimed your maximum RRSP deduction in years past you can carry forward any unused deduction room indefinitely. The Canada Revenue Agency (CRA) will calculate any cumulative deduction amount carried after 1991 when determining your maximum RRSP deduction limit. This can be found on your Notice of Assessment.

What is "RRSP room"?

This is the amount of contribution room you have carried forward after 1991 until the present. If you have not made your maximum allowable contribution in the past, chances are your "RRSP room" could be quite substantial.

How many RRSPs can I have?

There is no limit to the number of RRSP plans you can hold, but it's recommended that you try to consolidate wherever possible for ease of management. The amount you are allowed to contribute does not change with the number of RRSP plans that you hold.

How can I transfer my RRSP to BlueShore Financial?

It's very easy. RRSPs can be transferred tax free, by using a Transfer Letter. BlueShore Financial will provide you with the necessary documentation. Be sure to ask if your current financial institution charges an RRSP transfer-out fee.

What if I need to withdraw funds from my RRSP?

All funds withdrawn from an RRSP are subject to a withholding tax. This means they have to be declared as earned income and will be recorded on a T4RSP by the issuer of your plan. All RRSP withdrawals are also included in your taxable income.

What is withholding tax?

When you withdraw money from your RRSP, you must pay a tax on a percentage of the amount withdrawn:

• 10% on withdrawals up to and including $5,000
• 20% on withdrawals between $5,001 and $15,000
• 30% on withdrawals over $15,000

The amount of tax withheld will be reported to you on a T4RSP and can be claimed on your tax return.

Can I deduct interest and fees paid for my RRSP?

You cannot deduct any interest paid on money you borrowed to contribute to an RRSP.

You cannot deduct fees charged directly to you by the plan administrator of an RRSP or fees deducted directly from an RRSP. You may be able to deduct carrying charges and interest you paid to earn income from investments other than RRSPs. This includes fees to manage or take care of your investments other than administration fees paid for RRSPs.

I have lost money in my RRSPs that are mutual funds*. Can I claim these losses on my return?

No, you cannot deduct mutual fund losses within RRSPs.

Can I leave my funds in an RRSP indefinitely?

No. You must transfer your RRSP portfolio into some type of retirement income option or withdraw your funds by December 31st of the year in which you turn 71. After this, you have three options:

• Transfer into an annuity
• Transfer into a RRIF
• Cash in your RRSP

Mutual funds are offered through Credential Asset Management Inc. Mutual funds and other securities are offered through Credential Securities, a division of Credential Qtrade Securities Inc. Credential Securities is a registered mark owned by Aviso Wealth Inc.