RRSP'S are one of the last meaningful tax shelters left to Canadians. Start an RRSP today!
The benefits of early contribution
Two taxpayers, both 25 are considering RRSP'S . . .
- Taxpayer A starts immediately, contributes $2,000.00 a year for 10 years at 8%
- Taxpayer B waits 10 years to start, contributes $2,000.00 a year for 30 years at 8%
- When they turn 65, Taxpayer A will have $70,000.00 more in her RRSP'S despite the fact that taxpayer B contributed three times as much!
How much can I Contribute to an RRSP?
Making the maximum contribution each year helps to ensure your financial security at retirement.
You can determine your 2011 RRSP deduction limit by referring to your 2010 assessment notice or as follows:
- Any unused RRSP deduction room at the end of prior years
PLUS the lesser or 18% of your earned income for 2010 or the RRSP dollar limit
- The maximum RRSP deduction limit for the subsequent year is as follows : 2011 - $22,450
- MINUS the Pension Adjustment reported on your T4 slip
- MINUS any past service pension adjustment reported in 2010
- PLUS any Pension Adjustment Reversal reported for the years after
When can I contribute?
To be deductible for 2011, you must make your RRSP contribution before February 29, 2012. Establish a monthly pre-authorized withdrawals contribution plan and forget about the rush.