FREQUENTLY ASKED QUESTIONS ABOUT RRSPs

WHAT IS AN RRSP?
A Registered Retirement Savings Plan (RRSP) that allows investors to make tax-deferred contributions towards their retirement savings. Permits you to defer your tax payments until you have retired, at which point most people are in a lower tax bracket.

WHO CAN INVEST IN AN RRSP?
Anyone meeting the following criteria can invest in an RRSP:

a) Valid SIN number
b) Earned Income in the Previous Year
c) Filed a tax return in the previous year
d) Can invest in an RRSP in your own name until the end of the year in which you turn 69

WHAT ARE THE ANNUAL CONTRIBUTION LIMITS?
· Your maximum annual RRSP contribution is 18% of your earned income for the preceding year (excludes investment, pension, and other sources of income) + any unused RRSP carry forward room from previous years.
· Future Contribution Limits listed below are indexed to rise with the average annual wage increases.

(* expected value only)

CAN I CARRY FORWARD UNUSED RRSP CONTRIBUTIONS FROM PREVIOUS YEARS?
Yes, you can carry forward any unused RRSP contributions from any year since 1991. This unused contribution room can be carried forward indefinitely.

HOW DO I DISCOVER HOW MUCH I CAN CURRENTLY CONTRIBUTE TO MY RRSP?
The amount you can contribute is noted on your Canada Customs and Revenue Agency (CCRA) Notice of Assessment.

WHEN CAN I MAKE RRSP CONTRIBUTIONS?
You can contribute to an RRSP annually, from the beginning of any year until 60 days after the calendar year ends.

RRSP contributions can be made in lump sum payments or regular contributions throughout the year.

Monthly pre authorized chequing contributions can be made starting with as little as $50 per month.

WHAT INVESTMENTS SHOULD I HOLD IN MY RRSP?
Your RRSP should be diversified and you can choose among various types of investments depending on your savings goals and risk tolerance.

1) Fixed Income Investments
2) Balanced Funds
3) Equity Funds

ARE THERE ANY ITEMS I CANNOT HOLD IN AN RRSP?
Tangible assets such as gold, bullion, jewelry or real estate are ineligible for RRSP investments.

HOW LONG MAY I HOLD INVESTMENTS IN MY RRSP?
· Your RRSP must be collapsed by December 31st of the year in which you turn 69. At this time you can transfer the assets to:
o RRIF
o Withdraw the Assets: Fully taxable in year withdrawn
o Annuity

HOW CAN I OPTIMIZE MY RRSP INVESTMENTS?
· For maximum returns invest:
o As early in the year as possible
o As early in life as possible
o Contribute as often as possible
o Contribute as much as you can each year

CAN I HAVE FOREIGN INVESTMENTS IN MY RRSP?
Eligible foreign investments may be held in your RRSP as long as the book value (purchase price) of those investments does not exceed 30% of the original cost of all of the investments in that particular RRSP account.

IS THERE ANYWAY TO INCREASE THE AMOUNT OF FOREIGN CONTENT PERMITTED IN MY RRSP BEYOND THE 30% LIMIT?
A) Investing in Canadian funds that have 30% of their portfolio in foreign investments
B) Utilize derivative-based funds, as they are considered 100% Canadian since they primarily utilize Government of Canada Treasury Bills to purchase contracts or options on foreign stocks and foreign indexes.

WHAT HAPPENS IF I EXCEED THE FOREIGN CONTENT LIMIT IN AN RRSP?
If you exceed the 30 per cent limit on foreign content, a penalty tax of one per cent of the excess per month applies.

HOW CAN AN ADVISOR HELP WITH MY RRSP INVESTMENTS?
· Help you select a personalized asset mix suited to your financial situation and goals.
· Assist you with all the paperwork in setting up, transferring, and adjusting your RRSP in a rapid and accurate manner.
· Keep you up to date on any important changes in administrative rules, tax laws and economic conditions that could or will affect you or your family.
· Educate you about the various investments options available and suggest ones for your personal situation.
· Monitor your investments and help you adjust them accordingly during various stages of you life as your financial situation and goals change.

HOW DOES THE RRSP HOMEBUYERS PLAN WORK?

ELGIBILITY: You cannot have lived in a home owned by you, your spouse or partner during the period beginning January 1, 1999 and ending 31 days before the 2003 withdrawal

LIMITS: $20,000 per participant

REPAYMENTS: one fifthteenth per year beginning in 2005 (payable by March 1, 2006) and ending in 2019

LINK - Home Buyer's Guide

HOW DOES THE RRSP LIFELONG LEARNING PROGRAM WORK?

ELGIBILITY: You, your spouse or partner must be enrolled full-time (part time for disabled students) before March 1, 2004, in a qualifying education program of at least 3 months duration

LIMITS: 10,000 per year to a maximum of $20000 over 4 years

REPAYMENTS: one tenth per year beginning in the second consecutive year that the student cannot claim the education credit for at least 3 months but no later than March 1, 2009

LINK - Lifelong Learning Plan Guide

This material is for information purposes only and should not be construed as legal or tax advice. Every effort has been made to ensure its accuracy, but errors and omissions are possible. Individual circumstances may vary and specific legal and tax advice is recommended. Future tax changes and market conditions may affect this information.

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