5 RRSP TIPS

One of the best ways to save for retirement and cut your tax bill is with a registered retirement savings plan (RRSP).

Every dollar you put into an RRSP can be subtracted from your taxable income. This means you’re paying yourself first. And you may get a tax refund this spring when you file your taxes. If you’re looking for ways to grow your savings, check out these 5 RRSP tips.

Invest all year round

It’s easier to save smaller amounts over the entire year. You won’t need to rush to make a large RRSP contribution at the end of February. A few dollars now will go a long way later, once growth and time are factored in.

Reduce your combined tax by income splitting

Splitting income between you and your spouse may help you lower your taxes. When you put money into a spousal RRSP, the money will belong to your spouse. How much you can put in will depend on your contribution room but you get the tax deduction. This may be useful if you earn a lot more than your spouse does. Consider contributing to a spousal RRSP. You may get a bigger tax break than your spouse would by contributing to their own RRSP.

You may also get a tax break later when you and your spouse take money out in retirement. Thanks to the extra money you’ve put into your spousal RRSP, your spouse may take out more income. This may be useful if you earn a lot more than your spouse during retirement. When your spouse takes out a bigger share that means you can take out less from your RRSP. Which means you may pay less income taxes.

There may be exceptions depending on your plan. So it’s always a good idea to double check.

Watch out for over-contributing This can cost you

You may need to pay a penalty if you over-contribute to your RRSP. The government charges a 1% penalty tax, assessed monthly, for each month you’re over your limit.

Save your “extra” cash

Got a bonus, inheritance or cash gift? You can use it to give your RRSP a boost. Some employers may offer to move your bonus into your RRSP. This can be a great perk to take advantage of.

Grow your RRSP until age 71

You have until the end of the year you turn 71 to maximize your RRSP contributions. After this point, you’ll need to turn the money in your RRSP into retirement income. When you start to withdraw your money, your income will likely be lower. So you may pay tax at a lower rate.
SEE WRITE UP AT theripregistry.ca/blog https://theripregistry.ca/blog/
age Limit for contributing.

Bonus TIP: Your 2019 RRSP contribution room is available on your 2018 Notice of Assessment. You can also find it in your Canada Revenue Agency (CRA) online account