Registered Retirement Savings Plan (RRSP)
There are two advantages to investing in a registered retirement savings plan. These advantages are listed below:
1) The contributions you make throughout the year are tax deductible. Every dollar you contribute to an RRSP (within your contribution limit) reduces your income earned that year, which reduces the amount of tax you pay.
2) Funds grow tax-free.
Every individual is given an annual maximum contribution amount based on your income earned in that year. This amount can be found on your Notice of Assessment.
You can withdraw at any time (as long as your funds are not locked-in), but the amount you withdraw is added to your income earned that year.
When you turn 71 you have three options of what you can do with the RRSP. These options are listed below:
1) Transfer funds to a Registered Retirement Income Fund (RRIF).
2) Buy an annuity.
3) Cash out your RRSP and claim it as income earned throughout that year.
1) The contributions you make throughout the year are tax deductible. Every dollar you contribute to an RRSP (within your contribution limit) reduces your income earned that year, which reduces the amount of tax you pay.
2) Funds grow tax-free.
Every individual is given an annual maximum contribution amount based on your income earned in that year. This amount can be found on your Notice of Assessment.
You can withdraw at any time (as long as your funds are not locked-in), but the amount you withdraw is added to your income earned that year.
When you turn 71 you have three options of what you can do with the RRSP. These options are listed below:
1) Transfer funds to a Registered Retirement Income Fund (RRIF).
2) Buy an annuity.
3) Cash out your RRSP and claim it as income earned throughout that year.