Retirement Planning

Retirement Planning

Registered Retirement Savings Plans (RSPs)

An RRSP is a formal investment plan which allows an individual to accumulate savings and earnings for retirement on a tax-sheltered basis. We offer a broad range of investment products in a self-directed RSP portfolio which is monitored on an ongoing basis.

There are three reasons to contribute to an RRSP: the contributions are tax deductible, the income generated in your RRSP grows tax free until withdrawn, and you can use an RRSP as an income splitting tool with your spouse. You may contribute into your RRSP up to age 71.

The maximum amount that you can contribute to your RRSP is based on your previous year’s earned income less any pension adjustment. Assuming you are not a member of a registered pension plan or deferred profit sharing plan, you can contribute 18% of last year’s earned income, to a maximum as listed below plus any unused contribution room. Your last year’s earned income will determine your RRSP contribution limit.

The contribution limits are as follows:

Year Maximum RSP Limit
2017 $26,010
2018 $26,230

 

If you are an incorporated over age 40, an IPP has significant benefits over investing in a regular RSP.

IPPs are recognized as an alternative to an RSP for employees of a corporation. IPP’s are approved by Revenue Canada and can be setup for one or a group of employees. Contributions are tax deductible by the employer and are a non taxable benefit to the employee. IPP’s can only be setup by active business corporations, not holding companies and the plan member (employee) must be a Canadian resident and pay Canadian taxes.

If you want to consider an IPP or simply analyze the benefits vs your RSP, please feel free to connect with us and one of our IPP specialists will setup some time to see you.

The information provided on this web site is of a general nature and may not include all of the applicable terms and conditions and may be subject to change without notice. For complete information please contact one of our representatives.

In general, your RSP matures no later than December 31 of the year in which you turn age 71. The RSP can then be cashed out or more commonly converted to a RRIF or annuity.

The RRIF can be based on your or your spouses/common law partners’ age. While RRIFs have a minimum withdrawal amount, there is no maximum amount to withdraw and the value increases yearly. As of 2018 for example at age 71, the minimum is 5.28% of the fair market value. Withdrawals from a registered account are considered income and are taxed accordingly.

Canada Pension Plan is adjusted in January of every year to take into account inflation. In general, the CPP retirement pension at age 65 is a maximum of $1134.17/month as of 2018.

Old Age Security (OAS) benefit is a monthly payment available to seniors aged 65 and older who meet the Canadian legal status and residence requirements. You may need to apply to receive it. Generally the maximum monthly benefit of $586.66 is paid to those with a net income above $74,788/year. Those with income greater, may qualify for a reduced benefit. If your income is over $121,314, the OAS pension is eliminated.

For complete information on CPP, OAS and GIS see Canada.ca