It’s nearing deadline time once again. The deadline for making your 2013 contribution to investments held in your Registered Retirement Savings Program (RRSP), that is. And, even though it is only a few days away, you have choices to make that can enhance your retirement nest egg and save on taxes. Here are a few last-minute RRSP tips.
RRSP deadline details:
- March 3, 2014 at 11:59 PM is the deadline for contributing to investments in your RRSP for the 2013 tax year.
- You may make a maximum contribution of up to $23,820, depending on your earned income in 2013 (and minus your pension adjustment if applicable).
- You’ll find your personal maximum allowable contribution on your most recent notice of assessment from the Canada Revenue Agency (on line (A) of the RRSP Deduction Limit Statement).
- You can carry forward unused contribution room from prior years.
- You can fill your unused contribution room in a single year or over a number of years until the end of the year in which you reach age 71 (or the end of the year your spouse/common-law partner turns 71).
RRSP tax-saving, tax-deferring, income-building tips:
- Maximize this year’s RRSP contribution Making your maximum allowable contribution each taxation year is the best strategy for tax savings and to maximize potential long-term growth.
- Maximize last year’s RRSP contribution Catch up on your unused contribution room as quickly as possible for additional tax savings and enhanced long-term growth.
- Borrow to gain You could maximize this year’s contribution or catch up on past contribution room with an RRSP loan. The money you borrow will generate a tax break and add to your tax-deferred RRSP growth potential. The key is to get a loan at a low interest rate and pay it back quickly. Use your extra tax savings to help pay off the loan. Split to gain If your spouse’s income will be lower than yours over the next few years or in retirement, a spousal RRSP can generate retirement income that is subject to less tax. The plan is in your spouse’s name but you contribute to it. Your total can’t exceed your personal yearly contribution room but your spouse’s limit is unaffected by your contribution.
The right RRSP strategies will save taxes and help you retire with more – but your RRSP alone is usually not enough to fund the retirement of your dreams. By adding in a well-balanced non-registered investment portfolio, you can get there comfortably. Your professional advisor can help make it happen for you.
This column, written and published by Investors Group Financial Services Inc. (in Québec – a Financial Services Firm), and Investors Group Securities Inc. (in Québec, a firm in Financial Planning) presents general information only and is not a solicitation to buy or sell any investments. Contact your own advisor for specific advice about your circumstances. For more information on this topic please contact your Investors Group Consultant.