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RRSP

RRSP Season Is All Year Round

Although the official deadline has passed now to be able to use your RRSP contributions for the 2010 tax year, it doesn’t mean that RRSP season is over. In fact, it is better to contribute to your RRSP all year round than wait until the last possible minute to put a lump sum into it.

This year I challenge you to set up automatic payments into your RRSP every time you get paid. That way you will not have to burden yourself with coming up with a lump sum every year. If you discover that you still want to put in more, then you can top up your contributions before the deadline, but the lump sum will be far less of a burden.

June 6, 2011

Taxes

What Tax Receipts Do I Get For My RRSP?

Tax time can get confusing with all the various tax slips you get from your bank. It is sometimes hard to keep track of them all. You might be wondering what tax slips you should be expecting in the mail if you have an RRSP, before efiling online for the year.

1. Contribution Receipts – You will only get receipts if you made contributions.

If you made any contributions during 2010 or during the first 60 days of 2011, you will receive one or more contribution receipts from your financial institution. You would have already received the first 60 days of 2010 receipt in the spring of 2010 and you may have already claimed this on your 2009 taxes. However, you will want to watch out for the remainder of 2010 receipt (March 2^nd to December 31^st) as well as for the first 60 days of 2011 receipt (Jan 1^st to March 1^st).

March 30, 2011

Taxes

Should I Contribute To My RRSP This Year?

Canadians have until March 1^st to make an RRSP contribution towards their Registered Retirement Savings Plan (RRSP) in order to take advantage of a tax deduction for the 2010 tax year.

Before you make this important decision, be sure to consider a few things:

Do you have the ability within your budget to make a contribution?

If you haven’t been contributing regularly all year, have you set enough money aside in order to make a lump sum contribution?

If you will be dipping into your emergency funds in order to make your contribution or you will be left just scraping by, then perhaps it is wise to just hold off in making any contributions this year. Why? Because if you are depending on your RRSPs as a back up emergency fund then there is no point in putting money into an RRSP in the first place. There are just too many tax penalties and negative implications for making an RRSP withdrawal.

January 20, 2011

Investing

Is It Wise To Put Money Back Into An RRSP After A Withdrawal?

If you had to withdraw funds from your RRSP in 2010, the good news is that you still have until March 1, 2011 to make a contribution to help offset your withdrawal. Although you will never get your contribution room back for the amount you took out, at least you won’t suffer as many tax penalties by putting some or all of the money back.

However, before you decide to put the money back, make sure that you can truly afford to do so. If you don’t already have some money set aside for emergencies, then it is probably better to refrain from adding any additional money into your RRSP. Why? Because you are just as likely to end up having to make another RRSP withdrawal and then it defeats the purpose of contributing to an RRSP altogether. Just be prepared to pay some tax in the Spring.

January 6, 2011

Taxes

Did You Overcontribute To Your RRSP?

You can overcontribute to your RRSP by up to $2,000 without being penalized. However, you cannot claim a deduction for the excess amount.

If you overcontribute by more than $2,000, you are subject to a one per cent penalty tax for each month you are in excess of that. You have to complete a T1-OVP Individual Tax Return for RRSP Excess Contributions to calculate the amount of the overcontribution and penalty tax. This form must be filed, and the tax remitted, within 90 days from the end of the year (March 30, 2011 if there was an excess amount in the plan at the end of a month in 2010.)

November 25, 2010

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