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RRSP
 
 
  "A Great tax-efficient tool
                  for Retirement Planning"
A Registered Retirement Savings Plan or RRSP is an account that provides tax benefits for saving for retirement in Canada.
RRSPs may reduce taxes in up to three ways :
Contributions to RRSPs, up to limits described below, may be deducted from income before calculating income tax due.
Income earned within the account (interest, corporate dividends, trust distributions, capital gains) is not taxed until money is withdrawn from the plan, allowing the plan to grow faster than the same investments would grow if they were held outside the plan and thus subject to tax.
Money may be withdrawn from an RRSP in tax years when one is in a lower income-tax bracket because of lower income (due to retirement, unemployment, etc.) than tax years when one makes contributions.
Contribution Limit
A RRSP deduction limit is the maximum amount of RRSP contributions that can be claimed on a tax return for a given tax year.
After filing a tax return (or any adjustments to the tax return), each tax payer receives a Notice of (Re) Assessment from the Canada Revenue Agency, indicating their new RRSP deduction limit.
A deduction limit is generally calculated as 18% of a person's earned income from the previous tax year, minus any "pension adjustment", up to a specified maximum. This specified maximum has been rising as shown in the table.
Any RRSP deductions not taken in a tax year are carried forward indefinitely to future tax years. So, for example, if a person's RRSP deduction limit is $8,000 and he deducts only $3,000, the unused $5,000 deduction is carried forward.
Funds may be withdrawn from a RRSP at any time as long as the RRSP is not locked-in.
An account holder is able to cash out an amount from an RRSP at any age. However, any amount withdrawn qualifies as taxable income and is therefore subject to withholding tax.
Before the end of the year the account holder turns 71, the RRSP must either be cashed out or transferred to a Registered Retirement Income Fund or an annuity.
Home Buyers Plan
Allows to withdraw up to $20000 from his/her RRSP to buy or build a qualifying home if neither spouse has been a house owner for past 4 years. The home must be in Canada and the purchaser must occupy it as his/her principal residence by October 1 of the year after the year of withdrawal
Lifelong Learning Plan
This program allows individuals to borrow from an RRSP to go or return to post-secondary school. The user may withdraw up to $10,000 per year to a maximum of $20,000 over a 4 year period. The loan must be repaid over a period no longer than 10 years. Each year a minimum of 10% of the total loan must be paid.
 
 
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