If you’re planning to contribute to your RRSP and take advantage of the tax benefits it offers, you must do it before this year’s deadline. You also need to take the RRSP limit into consideration.
If you want to make an RRSP contribution this year, you will be making what is seen by many financial experts as a wise choice in planning your financial future. Not only can making contributions to an RRSP help you save money for retirement, but this practice can also bring you tax benefits as well. In order to get the maximum tax benefit, however, you will need to respect certain rules related to the RRSP limit as well as the contribution deadline for the 2011 tax year.
This limit varies according to certain factors in your financial situation. In general, it is 18% of the income you’ve earned in the prior year, up to a maximum of $22,450 for the 2011 tax year. This amount, however, will be lower for those who are on a registered pension plan sponsored by their employer. The exact amount which will reduce the RRSP limit is shown on your T4 slip that is given by employers early on in the year. If you want to make an RRSP contribution and declare it on your 2011 tax return to get the relevant tax benefits, you will need to do so before the February 29th deadline this year. Investors should be aware that there are no extensions of this deadline possible.
If you still haven’t started an RRSP or are not sure of which investment vehicles to use for one this year, then there is still some time left to make your decision. Speaking with a qualified financial advisor such as one working for Raymond James Financial can help you make some sense out of your investment goals for your retirement and make you discover some different types of investments that you can use.
While many people are aware that you can have GICs or stocks in your RRSP, relatively few people are aware of bankers acceptances, for example. Not all types of investment will be suitable for all people. Therefore, it is important that individual investors exercise their due diligence and compare their options. It is even a better idea to consult a financial advisor in order to get some professional advice.
You could also find out more about some other types of products that can help you save money on your taxes. For example, there are Tax Free Savings Accounts, or TFSA’s available to Canadians. While the rules TFSA’s are different than for RRSPs, they might still bring some additional tax benefits for those who have reached their RRSP contribution limit this year and are looking for another way to invest the remaining capital.Tags: money