A Registered Retirement Savings plan is an important part of smart financial planning. Not only do RRSP contributions help you plan for your future, they also reduce how much you have to pay in income tax.
Your annual RRSP contribution limit is 18% of the prior year’s earned income to a maximum of:
2020 = $27,230
Be sure to look into your unused contribution room and consult your 2019 Notice of Assessment to confirm your contribution limit.
The amount of money you invest into your future by using RRSPs offers an immediate tax break. This is because RRSP contributions are entered on the section of your return used for applying deductions to determine your net income. The lower your net income, the less income tax you have to pay.
What about Spousal RRSP’s?
A spousal registered retirement savings plan (RRSP) can offer additional benefits that you can take advantage of, such as paying less tax as a couple over your lifetime. All or a portion of your RRSP contribution can be made to an RRSP in your spouse’s name. As the contributor, you get the deduction, but your spouse is the owner of the plan.
For assistance in maximizing your 2020 contribution, or to setup a new account, please send us an email. Please connect with our team at any time
to discuss these options.