Frequently Asked Questions

At what age should I begin Contributing to my RRSP?

Start your RRSP NOW. Contribute as much as you can afford, as soon as you can. Even modest regular contributions can build over the years into a significant retirement nest egg. Canada Customs and Revenue Agency now makes it easy to know how much you can contribute tax-free to your RRSPs each year, by simply referring to the previous tax year’s Notice of Assessment. The advice on this notice includes both the maximum amount which you can contribute, based on your previous year’s earned income, plus any unused contribution room carried forward from previous years.

How old do I have to be to open an RRSP?

You can open an RRSP as soon as you have qualifying earned income. Even a child who has earned income can open an RRSP.

Don’t wait until the last minute to contribute to your RRSP.

It’s a sound strategy to contribute early in the tax year. Contributing at the earliest possible date rather than waiting for the deadline can make a big difference because your savings generate more compound interest. The difference really adds up! You should contribute early.

Your savings generate more compound interest if you contribute early in the tax year.

I did not maximize my RRSP last year. Is there anything I can do?

If you don’t contribute the maximum amount allowable to your RRSP in any year, you can carry the unused portion forward indefinitely. Amounts “carrier forward” should be reflected in the statement provided by Canada Revenue Agency (CRA) with your “Notice of Assessment”.

What is my maximum RRSP contribution limit for 2016?

Your 2017 maximum contribution limit is 18% of your previous year’s earned income to a maximum of $26,230.00 less any pension adjustment, plus any unused contribution room carried forward from previous years. 

Can I invest my RRSP money in mutual funds?

Mutual Funds are very popular and are widely recommended for RRSPs. Why, because your money is pooled with other investors who have the same objectives. You own a part of a broadly diversified portfolio of securities that you could never duplicate if you were investing on your own.

Should I pay down my mortgage or put money into my RRSP?

The answer to this question is dependent upon your age. If you are close to retirement, then the benefit of the RRSP, outside of reducing income tax, is minimal. So paying down your debt in this instance is a better solution. Otherwise, normally it is better to choose the RRSP, due to the benefits of compound interest over time. A good solution to this dilemma is to put money into your RRSP, and pay down the mortgage with the tax refund it provides you. 

Am I able to withdrawal funds from my RRSP? 

Although the main purpose for having an RRSP is to save for retirement, you may sometimes have to draw on these savings to meet unexpected financial needs. 

While you can make withdrawals of any amount, any time you wish subject to the terms of the investments you hold, your RRSP savings are only sheltered from taxes for as long as they remain in your plan. 

All RRSP withdrawals are subject to "withholding tax" -- income tax deducted at source before you receive your funds. They also must be declared as income on your annual tax return, potentially increasing the overall tax you'll pay.

Withholding tax rates (Deducted at source)

Amount of RRSP Withdrawal:

All provinces except Quebec

Less than $5,000         10%

$5,000 to $15,000       20%

More than $15,000    30%

Quebec Residents

Less than $5,000         23%

$5,000 to $15,000       31.5%

More than $15,000     36.5%


The total amount of tax you’ll ultimately pay is based on your total income for the year – which includes any RRSP withdrawals – and is determined when you file your annual tax return.

What kind of investments can I hold in my Self-Directed RRSP?

·     Common and preferred shares of Canadian corporations listed on any Canadian and many foreign stock exchanges

·       Fixed-income securities including bonds, debentures, strip bonds and notes: 

·       issued by a corporation which has shares listed on a Canadian stock exchange; 

·       issued by a Canadian government (federal, provincial, municipal); 

·       Guaranteed by the Government of Canada 

·       Many foreign shares and fixed-income securities 

·       Canadian and Provincial Treasury Bills (T-Bills), 

·       Canada Savings Bonds and Provincial Savings Bonds 

·       Term Deposits, GICs

·       Cash in Canadian currency 

·       Options to purchase eligible securities 

·       Mutual Funds 

·       Mortgages 

·       Shares or units of eligible small business corporation or partnerships/trusts


What is the RRSP Lifelong Learning Plan (LLP)?

The RRSP Lifelong Learning Plan (LLP) allows you to withdraw up to $20,000 from your RRSP to finance full-time training or education for you or your spouse without paying taxes on the withdrawn amount. You are eligible if: 

·       you are a Canadian resident, 

·       you or your spouse has enrolled, as a full-time student in a qualifying educational the education program is for a minimum 3 month duration at an eligible education institution, and 

·       the enrolment takes place before March of the year following the year of the RRSP withdrawal. 

Withdrawals must be repaid to your RRSPs over a period for no more than 10 years. Usually, each year you have to repay 1/10 of the total amount you withdrew until the full amount is repaid. Any amount that you do not repay when it is due will be included in your income for the year it was due. 

Your first repayment year is usually one of the following two years, whichever comes first: 

·       the second year after the last year the LLP student was entitled to claim the education amount on line 323 of the student's income tax return; or 

·       the fifth year after your first withdrawal under the LLP. 

Can I transfer funds from an RESP to an RRSP?

You can transfer up to $50,000 of the accumulated investment income in your Registered Education Savings Plan (RESP) directly to your own or spousal Registered Retirement Savings Plan (RRSP) without paying tax. However, to qualify for the contribution, subscribers must meet all following conditions:

RESP has been in existence for at least 10 years or subscribers /beneficiaries have died 

All RESP beneficiaries are at least 21 years old, 

All RESP beneficiaries do not pursue higher education, and 

Subscribers have enough RRSP contribution room. 

For more information on using the accumulated investment income in your RESP to contribute to your RRSP, contact your local tax office. 

Can I transfer a severance package to my RRSP? 

If you receive a severance package or other form or retiring allowance upon retirement or termination or your employment, you can transfer all or a portion of the above amount to your own RRSP within 60 days after year-end. 

Note: The above transfer does not reduce your RRSP contribution room. 

What are the benefits of a spousal RRSP?

The more taxable income you have the higher your tax bracket. You should, therefore, consider allocating future taxable income as evenly as possible between you and your spouse - commonly known as the "income splitting" opportunity. 

You are entitled to put all or part of your allowable annual and carried forward RRSP contribution eligibility into an RRSP in your spouse's name. This may lower the combined income tax you and your spouse must pay each year when you withdraw your RRSP eligibility savings during retirement. 

As the contributor to a spousal RRSP, you benefit from the tax deduction while building a retirement nest egg for your spouse. Amounts withdrawn from a spousal RRSP will be considered part of your spouse's taxable income, provided you have not contributed any amount to a spousal plan in the current year or the two preceding years. A spousal RRSP is most beneficial in a situation where the plan holder (spouse) would otherwise have little retirement income while the contributing spouse would have a significant amount of the income.

What if we separate or divorce?

An RRSP is legally registered in your name. What happens to it should unforeseen events occur? 

If you and your spouse separate or divorce, and are living apart when you settle property and assets, either you or your spouse can transfer existing RRSPs to the other -- tax-free -- if you so wish, providing there is a written separation agreement or court order. 

It may also be timely to designate a new beneficiary at this point -- unless you wish your former spouse (if named as original beneficiary) to receive the proceeds from your RRSP upon your death.

Can I designate a beneficiary on a RRSP?

The value of your RRSP may be transferred to a surviving spouse on a tax-deferred basis, if directed by Designation of Beneficiary or by Will. Otherwise, the value of your RRSP at the date of your death is taxable as income. 

What happens to my RRSP after age 71?

You can make an RRSP contribution up to December of the year you turn age 71. After then, you can either cash in your RRSP or transfer it into a Registered Retirement Income Fund (RRIF) or a Registered Annuity from which you must begin drawing a retirement income. Sometimes the best strategy would be a combination of the two. There is also an opportunity to go beyond age 71 if your spouse is under 71. You can make a spousal contribution and get the deductions on the provision that you have earned income. 

Have you ever wondered what is holding you back from achieving great wealth in your life?

If you would like to learn more about Argosy Securities or if you would like to receive more information on how to set a better financial path for you and your family, just click on the link below: 

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