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RRSP 101 (All RSP questions answered)

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this is basic info, i know this already!	17% (4)

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Poll:RRSP 101 (All RSP questions answered)
Choice		Stats
I find this info useful, thanks.	83% (20)
this is basic info, i know this already!	17% (4)

Val
Member since: Oct 03

Posts: 189
Location: Toronto
Post ID: #PID

Posted on: 22-10-06 17:54:38

I have not opened up a RRSP as yet, can you advise .For how many years one can carry forward RRSP contribution limit.

Can I hold RRSP investments in U.S.Currency

Thank you

reachash
Member since: Dec 03

Posts: 397
Location: Mississauga
Post ID: #PID

Posted on: 23-10-06 01:37:13

Overall a very informative post...but I beg to differ on few of the points and for the benefit of members I am posting my views on the same as under,

Quote:
Originally posted by TO-Puttar

3. What tax benefits can I get?
Ans. Any money you save in a RRSP account is tax deductible upto your "contribution limit". However you will pay tax when you take money out of the RRSP account or at the age of retirement. (I will explain more on taking out money without paying tax)

For Example: Your income is $30000 and you pay 33% tax. If you contribute $2000 this year you will get a tax refund of $660 (this is not including other refunds you may get)

IMHO....although majority of us may end up saving on total tax payable....but there is no gauantee of the refund amt...it can vary based on individual situation.....please consult your accountant

Quote:
Originally posted by TO-Puttar
5. How many RRSP's can I have?
Ans. As many as you like, and in 2-3 different banks if you wish, but you can only contribute upto your limit every year. This is called \"Contribution Limit\" , it is given on your T4.

The ontribution limit of a particular year is showing up on pr year's NOA(Notice of assessment)...not on T4....for example, if you want to find out the max limit that you can contribute, please check bottom portion of the second page of your notice of assessment from previous year.....so to be precise...one can't start contributing to RRSP till first inome tax return is assessed

Quote:
Originally posted by TO-Puttar
8. What happens if i take money out of the RRSP account?
Ans. You will pay a \"Witholding Tax\" to the CRA and the amount will count as income for your next year's taxes.

For Example: If you withdraw $5000, 10% i.e., $500 will be deducted and you will get $4500, then you will have to pay tax on $4500 when you file your taxes.

I am afraid but it doesn't work this way....the witholding of tax is right...but the % of tax witheld depends on the amt of withdrawal....bank will also issue a recpt for the tax witheld.....but more importantly...the entire amt of withdrawal is added to your total income of the year in which you withdraw from rrsp and then out of total tax payable you deduct the amt of tax witheld and pay only the difference.

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Let's help each other to grow & prosper in Canada

reachash
Member since: Dec 03

Posts: 397
Location: Mississauga
Post ID: #PID

Posted on: 23-10-06 01:50:12

Quote:
Originally posted by Val

I have not opened up a RRSP as yet, can you advise .For how many years one can carry forward RRSP contribution limit.

Can I hold RRSP investments in U.S.Currency

Thank you

You can carry forward your unused contribution limit fo as long as you don't use it....if you need any suggestion, please feel free to call me...

905-897-8346 work # (I work with one of the major banks)

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Let's help each other to grow & prosper in Canada

TO-Puttar
Member since: Jan 06

Posts: 15
Location: Toronto
Post ID: #PID

Posted on: 23-10-06 02:03:37

Quote:
Originally posted by Val

I have not opened up a RRSP as yet, can you advise .For how many years one can carry forward RRSP contribution limit.

Can I hold RRSP investments in U.S.Currency

Thank you

Your contribution limit is carried forward from the year you filed taxes till December 31st of the year you turn 69 years of age. However after you turn 69 your total RRSP savings become taxable. (there are some other tax saving options for retirees, but we wont go into that)

Also, you can have US$ investments as a part of your RRSPs. Currently there is no limit to foreign content in your RRSPs.

TO-Puttar
Member since: Jan 06

Posts: 15
Location: Toronto
Post ID: #PID

Posted on: 23-10-06 02:52:50

Thanks for following so closely I have edited the T4 mistake in my original post.

I agree with you about the witholding tax. It varys - it could be upto 20% depending on the amount of contribution.

The example i used for showing tax benefits does not include all possibilities either. The reason you cant get your full tax back is the cap limit on RRSP contribution.

My original post was for people with no RRSP savings - so that they start asking questions and learn about registered accounts.

Im not going to lie - the reason i did't write everything about everything is because I dont want to book sales here, readers can go to their own FA. Plus if i tell people everything they'll get confused and waste time thinking about situations that may not apply to them. As long as they ask their FA... im pretty sure their FAs are smart enough.

Val
Member since: Oct 03

Posts: 189
Location: Toronto
Post ID: #PID

Posted on: 23-10-06 21:25:11

Thank you for your reply.

The whole article was very informative.

reachash
Member since: Dec 03

Posts: 397
Location: Mississauga
Post ID: #PID

Posted on: 23-10-06 22:33:25

Quote:
Originally posted by TO-Puttar

Thanks for following so closely I have edited the T4 mistake in my original post.

I agree with you about the witholding tax. It varys - it could be upto 20% depending on the amount of contribution.

The example i used for showing tax benefits does not include all possibilities either. The reason you cant get your full tax back is the cap limit on RRSP contribution.

My original post was for people with no RRSP savings - so that they start asking questions and learn about registered accounts.

Im not going to lie - the reason i did't write everything about everything is because I dont want to book sales here, readers can go to their own FA. Plus if i tell people everything they'll get confused and waste time thinking about situations that may not apply to them. As long as they ask their FA... im pretty sure their FAs are smart enough.

It was my pleasure...and I never doubted your intentions....I do realise that you started the post for the benefit of readers....but I felt like commenting on incorrect stuff not incomplete stuff....but you did a great job starting this post....as RRSP season is going to start soon....and many readers may have this Qs.

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Let's help each other to grow & prosper in Canada

Contributors: investpro(34) Pramod Chopra(11) DP_gta(6) reachash(6) frnd(5) Mr.Scorpio(4) Ash20(4) TO-Puttar(4) Fido(4) regar(4) desiM(3) sallusworld(3) Big Vee(3) Iceberg(2) pratickm(2) VJ(2) Val(2) Blue_Peafowl(2) Shah(2) BlueLobster(1) Bingo(1) parth1970(1) Toronto_Puttar(1) ihpatel(1) JRF(1) RESP(1) desipyare(1) sw33tc0rn(1) rajvikas(1) blabber(1) surtalme(1) Full House(1) sendneeraj(1) hchheda(1) sumjo(1) dp_jain(1) kisi143(1) rsbagwell(1)

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RRSP 101 (All RSP questions answered)

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