What are Registered Retirement Savings Plans?
For most Canadians, a Registered Retirement Savings Plan (RRSP) is the cornerstone of their retirement strategy. Since 1957, Canadians have been able to shelter a portion of their earnings from taxation by investing them in RRSPs. the interest, capital gains and dividends generated by these retirement savings are also sheltered. Yet a surprising 71% of eligible taxpayers fail to take advantage of this tax deferral opportunity. What income can be sheltered in RRSPs? RRSP contributions can only be made by individuals with “earned income” taxable in Canada. this includes salaries, self-employment income, alimony and rental income, but not income from pensions or investments. How much can I contribute? Contribution limits are based upon earned income. The limits are set annually by the federal government and are adjusted for any company pension plan to which you may be a member. Your Money Concepts planner can help you to determine your maximum allowable contribution. At what age should I
