What Benefits Are There in Purchasing an RRSP?
July 27, 2010 | In: Uncategorized
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3 answers
Sally
July 27th, 2010 at 1:39 pm
Ask Lowell.
jseah114
July 27th, 2010 at 1:47 pm
The earnings in an RRSP is tax deferred until you draw the money out.
Ontario CGA
July 27th, 2010 at 2:44 pm
There are a number of benefits to investing within an RRSP. The majour ones are:
* RRSP contributions are deducted from income when preparing income taxes, thus lowering current tax liabilities / increasing any refund
* Investments within an RRSP are not subject to tax on their earnings, which allows for greater reinvestment
* If you’re married you have the option of contributing to what’s called a spousal RRSP. This allows you a current tax deduction, but in the future when the monies are withdrawn it’s taxed on the spouse. This is only a benefit if it’s reasonable to assume that the spouse will be in a lower tax bracket then yourself at retirement.
The amount that you can contribute is limited to your cumulative RRSP Contribution Limit, which would have been provided on your 2005 income tax Notice of Assessment.
If you’re considering investing I strongly suggest that you go and have a half hour sitdown with a financial planner. Ask for referrals from friends and family, or if worse comes to worse, go to your bank.