A Registered Retirement Savings Plan (RRSP) is a Canadian incentive that allows you to deduct from your income tax all contributions you make in an RRSP for your retirement. How does it work? Let's say you are currently self-employed, and therefore do not have any retirement plan you are contributing to. You can put away 18% of your income, up to $25,370 in your RRSP, and deduct that amount form your taxes.
You can also set up a spousal or common law RRSP and make the contribution for your life partner, thereby getting addition tax deductions. The funds in your account cannot be withdrawn until the age of retirement, and then they will be subject to regular income tax, although your own income will be much lower, and so will your tax bracket.
How to make the most out of your RRSP
At BrokerTeam, we are licensed to sell RRSPs. All of our funds comply with the Canadian Income Tax Act. You can select from a variety of financial instruments, including savings accounts, guaranteed investment certificates (GICs), segregated funds and mutual funds. If none of this is familiar to you, don't worry. We'll walk you through the process. You'll see, it's quite simple once you start.