February 2013 Newsletter
The deadline for contributions for the 2012 tax year is March 1st, 2013.
With RRSP’s forefront in most everyone’s mind these days, we would like to take this opportunity to provide some tips:
- Start Early: the sooner you start, the longer the opportunity for growth.
- Have a Plan: it is very important to plan what you want for the future and how investments will pay for it. Planning will include your investing style and the risks you’re willing to take.
- Stay Invested: Although the markets go up and down, by staying invested you increase the possibility of a higher return and lower the risks associated with trying to time the markets.
- Maximize your Contributions: By maximizing your contribution, you take full advantage of tax savings and are ensuring maximum growth potential.
Remember…the maximum allowable contribution for 2012 is 18% of your 2011 earned income to a maximum of $22,970. The maximum allowable contribution limit for 2013 is $23,820. Also, check to see if you have unused contribution room from other years.
A Group RRSP provides many benefits that may not be available through another savings or investment account such as:
- No Minimum Deposits: Start saving with as little or as much as you can afford. No amount is too small!
- Competitive Management Fees & Interest Rates: With a Group plan, you generally pay lower fees and/or receive higher interest rates than with an Individual RRSP.
- Convenience of Payroll Deduction: Contributing through regular payroll deductions is an efficient way to not only ensure your contributions are made on a timely basis but provides an opportunity to dollar-cost-average market variations.
- Instant Tax Savings: By contributing through payroll deductions to a registered plan, you immediately lower the amount of tax deducted from your paycheque. Pay yourself first instead of the government.
- Transfer Between Investments: Most financial institutions will waive their fees for moving your money from one investment option to another within a Group RRSP.
- Client Services: Members can access on-line retirement goal software, monitor their investments and accounts, make additional contributions, and take advantage of lower management fees by consolidating other RRSP investments under the Group RRSP plan.
We would like to arrange a Group RRSP plan for your organization or review any current group RRSP plan you may have. Please contact our office for more information.
In the event of death, the proceeds of your RRSP are distributed to whoever was named as your beneficiary or to your estate, if no beneficiary has been designated. This designation can be specified in either your RRSP or in your will. Quebec residents must make the designation by will or marriage contract for most plans.
The proceeds of the RRSP will remain tax-sheltered if one of these situations applies:
- Your surviving spouse is the beneficiary, and the proceeds are transferred into an RRSP or a Registered Retirement Income Fund (RRIF) in his/her name;
- You have no surviving spouse, but you have children or grandchildren who are minors named as your beneficiaries. They are dependent on your estate for financial support and will have the proceeds transferred to a term annuity registered in their names; or
- Children or grandchildren, regardless of age, who are financially dependent because of physical or mental infirmity. The RRSP proceeds will be transferred to an RRSP or RRIF registered in their names, or used to purchase an annuity.
In all other situations, the balance of the RRSP at the date of death is included as income on the plan holder’s final tax return.
Source: RBC Royal Bank