FIVE RRSP TIPS FOR 2021
RRSP season is here! As we continue to deal with the Covid19 pandemic, now is a great time to review and adjust your current plan to ensure it aligns with your goals moving forward. We have adapted digital technologies to our business that have allowed us to work at full capacity during these times and we would be happy to discuss your current financial situation.
With the March 1st 2021 RRSP deadline looming, we want to share five RRSP tips to consider this year. Please feel free to share with family & friends who may find this content relevant.
1) Pay yourself first with a pre-authorized chequing contribution plan
A pre-authorized chequing (PAC) contribution plan helps you make regular, automatic contributions to your investments. This strategy is more effective because contributing more frequently gives you the advantage of dollar-cost averaging. This also helps avoid the need for a lump sum deposit in February!
2) Contribute to a spousal RRSP
In a spousal RRSP, the higher income spouse makes an RRSP contribution and claims the tax deduction but the other spouse owns the plan and the money in it. This type of plan can be an advantage if one spouse earns a higher income than the other. Any contributions made by the higher income spouse will reduce their individual RRSP contribution room for the year but won’t affect how much the lower income spouse can contribute to their individual RRSP
3) Take the time to create an online CRA account
The CRA has a great online tool that houses important personal information such as your RRSP & TFSA contribution limits. Taking the time to gain this access, and if needed granting access to your advisor and accountant can help your financial team work more efficiently for you. Click here for the login link: My CRA
4) Buy your first home with the RRSP Home Buyers Plan
RRSP’s give first time home buyers the ability to co-ordinate their RRSP strategy with their home purchase. You and your spouse can each borrow up to $35,000 from your RRSP to buy your first home. You have up to 15 years to repay to your RRSP. Your repayment period will start the second year after the year you withdrew the funds.
5) The RRSP contribution limit for 2021
This years RRSP contribution limit is $27,830 compared to the maximum of $27,230 in 2020. Canadians can contribute up to 18% of their income or the maximum contribution limit. Your RRSP is a tax-sheltered account and any contribution towards the registered account is tax-deductible
Mutual Funds and Segregated Funds provided by the Fund Companies are offered through Worldsource Financial Management Inc., Other Products and Services are offered through John Creighton & J.P Consulting Inc.