The deadline to contribute to your RRSP for the 2018 tax year is March 1, 2019, and with the deadline nearly here, we at Softron are sharing our expertise regarding what you need to know about RRSPs.
What is an RRSP?
RRSP stands for Registered Retirement Savings Plan. An RRSP can be a valuable vehicle to save one’s money for their golden years. The RRSP allows for individuals to contribute parts of their income into the plan tax-free. Contributors are allowed to deduct a portion of their contributions from their taxable income as well, resulting in less tax paid during the year.
Home Buyers’ Plan
Thinking of buying a home in the near future? You can withdraw up to $25,000 from your RRSP in order to purchase or build a home under the Home Buyers’ Plan. To qualify for this option you must be a first time home buyer and the funds must be repaid to the RRSP within 15 years.
Lifelong Learning Plan
Want to go back to school to pursue your dream job? The Lifelong Learning Plan allows you to withdraw from your RRSP in order to finance full-time education for you or your partner. The Lifelong Learning Plan cannot be used to finance your children’s education and you must repay one tenth of the amount that you withdrew every year until the amount is placed back into the RRSP.
The year you turn 71 is the last year in which you can contribute to your RRSP. During this year you must choose to either withdraw your funds, transfer them to an RRIF, or use them to purchase an annuity.
Contribute to your RRSP before March 1, 2019 in order to be eligible for the tax deduction for the 2018 tax year. Our tax experts at one of our locations are always happy to help with preparing your return or download our TaxTron software to file your return online!