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Important RRSP Information

Quinn Waddington - Feb 08, 2017
The allowable contribution room for 2017 is 18% of your earned income* from 2016 to a maximum of $26,010.


RRSP Quick Facts


• The allowable contribution room for 2017 is 18% of your earned income* from 2016 to a maximum of $26,010.

• The last day to contribute to your RRSP for the 2016 tax year is March 1, 2017.

• RRSP contributions made during the first 60 days of 2017 can be used towards either your 2016 or 2017 RRSP limit.

*Earned income includes salary or wages, alimony received and rental income, but does not include investment income.


Minimize Taxes


• RRSP contributions can minimize income taxes in two ways:

1. Contributions up to your RRSP contribution limit can be treated as a deduction from your annual income.

2. Capital gains and income can compound tax-free inside your RRSP.  Taxes are payable only when the funds are withdrawn – typically in retirement, when you may be in a significantly lower tax bracket.


• If you have invested less than the maximum allowable RRSP contribution in the past, the unused contribution carries forward until December 31 of the year you turn 71. This means you can take advantage of past years’ extra contribution room to further mitigate tax.


• Consider a spousal RRSP. Spousal RRSPs allow you and your spouse to effectively split your retirement income to potentially reduce your household’s overall tax burden.


Early Withdrawals


Your RRSP is designed to help you make a long-term investment for retirement. Before making early withdrawals from your RRSP, consider:

• The impact of time on the value of the investment

• That the contribution room represented by the withdrawn amount will be lost

• That amounts must be reported as income for tax purposes in the year they are withdrawn


Here are two options to avoid the consequences of early RRSP withdrawals:


1. Home Buyers Plan: The Home Buyers’ Plan (HBP) allows first-time home buyers to borrow up to $25,000 in a calendar year from their RRSP to buy or build a qualifying home. The entire amount must be repaid within 15 years, starting in the second year after the withdrawal, generally at a rate of 1/15th per year.


2. Lifelong Learning Plan: The Lifelong Learning Plan (LLP) allows you to borrow up to $20,000 from your RRSP to pay for full-time training or education at a qualifying institution. A maximum of $10,000 may be withdrawn from the RRSP per calendar year and the total amount withdrawn must be repaid over 10 years, with the timing of the repayment period based on the length of enrolment of the student.


After Age 71


By December 31 of the year you turn 71, you need to wind down your RRSP. You have two options:


• Deregister all of the assets in the RRSP — the entire value of the assets withdrawn are treated as taxable income in the year withdrawn — or,

• Transferring the RRSP to a retirement income option like a Registered Retirement Income Fund (RRIF) A RRIF can be viewed as an extension of your RRSP. Your RRSP is used to save for your retirement, while a RRIF is used to withdraw income during your retirement – and, like an RRSP, a RRIF allows for tax-deferred growth, offers several investment options and is governmentregulated. While withdrawals from an RRSP are optional, you must make mandatory minimum withdrawals from your RRIF each year according to a schedule based on your age. Excess withdrawals are subject to withholding tax. Although RRIF contributions are not allowed, you can still maximize RRSP contributions in the year you turn 71, including any unused contribution room from previous years. Just be sure to make these contributions in plenty of time to convert them to a retirement income option before year-end. After age 71, you can also contribute to a spousal RRSP if your spouse is 71 or younger on December 31 of the year you make the contribution.


The Canaccord Genuity Wealth Management Advantage


Opening your RRSP at Canaccord Genuity Wealth Management (CGWM) means benefitting from a wide range of bespoke investment solutions along with the customized service of a boutique wealth management firm.  Your CGWM Investment Advisor has access to global investment ideas and opportunities, and the freedom and independence to deliver only those solutions that work best for you. We can help you to:


• Establish and implement the right investment strategy for your RRSP based on your goals, risk tolerance, responsibilities and values

• Manage your RRSP within the context of your comprehensive financial plan, so you have the best chance of achieving your goals


Contact me today to discuss your RRSP strategy.  (604) 699-0874 or