Registered Retirement Savings Plans (RRSPs)

An RRSP is a government-sponsored savings program designed to encourage you to save for your retirement. Incentives include:

• tax-deferred growth of your savings (you don’t pay tax until you withdraw the money),

• immediate tax advantages (every dollar you contribute is deducted from your income, so you pay less tax).

SPECIAL RRSP PLANS AND RULES

Spousal Contribution Plan – Spouses with higher taxable incomes can make contributions in the name of their spouse and receive the income tax deduction from their taxes. If there are no withdrawals by the spouse from the plan until the third year of the last contribution, the withdrawal will not be attributed back to the contributor and included in their taxable income. This is a great way to split income between spouses especially in retirement years.

Home Buyers’ Plan – This plan allows you to borrow a maximum of $25,000 from your RRSP ($50,000 for a couple) to buy your first home. You do not have to pay tax on the money you withdraw to use as part (or all) of your down payment, nor do you have to pay interest on the money while it is outside your plan. The key requirement is that you have to replace what you’ve taken out of your RRSP to buy a Home. And you’re required to repay a minimum amount each year – the equivalent of one-fifteenth of the amount you originally borrowed.

Lifelong Learning Plan – The LLP allows you to withdraw up to $20,000 from your RRSP to pay for your own or your spouse’s education.

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