A reminder to contribute to your RRSP (with a bonus side-helping of interesting facts)

February 22nd, 2023 post featured image

Here is our official, annual reminder that the deadline to contribute to an RRSP is right around the corner. March 1st in fact. If you have questions about whether an RRSP is right for you or how best to approach your savings this season, take a gander at some of our past blogs on the topic:

If you don’t have questions and are just here for the fun of it, read on for some quick facts about RRSPs.

1. Doctors are to thank for the creation of the RRSP

The Canadian Medical Association lobbied the federal government in 1957 to create a national retirement savings plan because doctors did not have workplace pensions.

2. RRSPs can hold a variety of assets

An individual can contribute bonds, equities, exchange-traded funds, foreign currency, guaranteed investment certificates, income trusts, labour-sponsored funds, mortgage loans, mutual funds, and savings accounts.

3. They can be used to buy a house or go back to school

The Homebuyer’s Plan and Lifelong Learning Plan are strategies that allow you to withdraw an amount of money up to a maximum ($25,000 for a home and $20,000 for education) in order to fund big purchases. The caveat for both includes a window of time in which the funds must be paid back to the RRSP in full (15 years and 10 years, respectively) to avoid tax penalties.

4. You can (usually) withdraw any time but there are consequences

Unless the RRSP is locked-in, you typically have the option to withdraw early. With this option, however, comes the consequence of permanently losing the contribution room for the amount withdrawn. Because the benefit of the RRSP is that it is cumulative, year over year, this does somewhat defeats the purpose of contributing to an RRSP in the first place.

If you have questions about opening an RRSP account or about making a last-minute contribution before the deadline, contact us to make an appointment with your advisor.