- RRSPs benefit Canadians by reducing their taxes and allowing their savings to compound tax free.
- RRSPs are beneficial to the government because they reduce the financial burden of looking after retirees.
- Not every investment can be placed in an RRSP account - only certain investments qualify for tax advantages.
- Most banks, brokers, financial institutions, trust companies and insurance companies offer RRSP accounts to their customers.
- Managed RRSPs require few decisions on the part of the investor but often include more fees.
- Self-directed RRSP accounts allow investors to exert more control over the assets in their portfolios.
- Because of the tax benefits provided by RRSPs, the Canadian government has capped the amount of money that can be contributed.
- Personal contribution limits are based on the contributor's annual income and appear on his or her notice of assessment.
- The Canadian government lets everyone contribute $2,000 more than the individual lifetime contribution limit without penalty.
- RRSPs are changing with government policy. Recent changes have increased the amount that people can contribute on an annual basis.
- Though you can take money out of an RRSP at any time, the penalties are harsh and it is usually not in your best interest to do so.
- Any unused contributions are carried forward to your future deduction limit.
- If one spouse is in a different tax bracket than his or her partner, RRSP contributions can be used to lower the total amount of taxes a couple must pay by using income splitting.
- Taking money out of an RRSP account before retirement can be very expensive because withholding taxes often apply.
- Once you've taken money out of an RRSP through an early withdrawal, you'll never be able to recontribute that amount.
- The RRSP Home Buyer's Plan allows contributors to borrow RRSP funds to finance the purchase of a home.
- The Lifelong Learning Plan allows RRSP contributors to borrow from their plans to pay for education for themselves or their spouses.
- RRSP contributions are deducted from earned income before it is taxed, so the money that you put into an RRSP is not taxed until it is withdrawn.
- Registered, gradual withdrawals, such as an RRIFs, are the best way to minimize taxes once you retire.
- To maximize your contributions, start early, add to your account regularly, ensure that your money is making as much interest as possible and avoid early withdrawals.