Miss­ing RRSP dead­line costly

The Guardian (Charlottetown) - - BUSINESS - Dick Young Man­ag­ing Your Money This col­umn, writ­ten and pub­lished by In­vestors Group Fi­nan­cial Ser­vices Inc. (in Québec - a Fi­nan­cial Ser­vices Firm), and In­vestors Group Se­cu­ri­ties Inc. (in Québec, a firm in Fi­nan­cial Plan­ning) presents gen­eral in­for­ma­tio

It’s a fact proven time and again by many thou­sands of Cana­di­ans: Con­tribut­ing to in­vest­ments held within a Reg­is­tered Re­tire­ment Sav­ings Plan (RRSP) is of­ten the best way to save for re­tire­ment. It is also an in­dis­putable fact that miss­ing the dead­line for mak­ing your max­i­mum 2015 con­tri­bu­tion can be costly and here’s why.

• If you are in a high in­come bracket this year, but will have a lower marginal tax rate in a fu­ture year, your tax ben­e­fit from that fu­ture RRSP con­tri­bu­tion will also be lower.

• The ad­di­tional tax re­fund you didn’t get be­cause you didn’t con­trib­ute this year is not avail­able to make in­vest­ments or pay down non-de­ductible debt.

• The govern­ment does not al­low you to make RRSP con­tri­bu­tions af­ter the end of the year that you turn age 71. So, if you (or your spouse) are turn­ing 71 in 2016, you should con­sider mak­ing an RRSP con­tri­bu­tion by De­cem­ber 31, 2016, or you’ll lose that taxsav­ing op­por­tu­nity.

• If you are mak­ing a con­tri­bu­tion to a spousal RRSP, do it be­fore De­cem­ber 31 each year to re­duce the time be­fore it can be with­drawn.

A con­tri­bu­tion to a spousal RRSP must stay in the RRSP for three cal­en­dar years be­fore it is with­drawn, or the with­drawal will be “at­trib­uted” back to the con­trib­u­tor.

• If you are claim­ing a spousal RRSP de­duc­tion for a de­ceased spouse or com­mon law part­ner, the con­tri­bu­tion to the spousal RRSP must be made in the year of death or dur­ing the first sixty days af­ter the end of that year or the op­por­tu­nity for this de­duc­tion will be lost.

• If you are re­quired to make a loan re­pay­ment un­der the Home Buy­ers Plan or Life­long Learn­ing Plan, miss­ing your con­tri­bu­tion will re­sult in a tax­able in­come in­clu­sion for that year.

The dead­line for mak­ing RRSP con­tri­bu­tions for the 2015 tax year is Fe­bru­ary 29, 2016.

Don’t miss it and don’t miss out on other tax-sav­ing, in­comeop­por­tu­ni­ties - talk to your pro­fes­sional ad­vi­sor soon.

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