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How savvy are you when it comes to RRSPs?

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of questions answered correctly

You know your RRSPs! Way to go all-star.

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It’s time to brush up on your RRSPs!

Don’t worry — we can help. First, review the essentials. Then, add a few more stats and tips to your pocket. Find out:
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  1. Let’s start with a warm-up question: What does RRSP stand for?

    Correct

    You nailed it! The Registered Retirement Savings Plan (RRSP) began in 1957. 11 years later, in 1968, 172,000 individuals (1 in 50 taxfilers) reported contributing. By 1987, “more than one-fifth of all taxfilers claimed RRSP deposits as a deduction on their tax returns.” Note: An RRSP is sometimes referred to as an RSP (Retirement Savings Plan)

    Incorrect

    Oh, shoot! The Registered Retirement Savings Plan (RRSP) began in 1957. 11 years later, in 1968, 172,000 individuals (1 in 50 taxfilers) reported contributing. By 1987, “more than one-fifth of all taxfilers, claimed RRSP deposits as a deduction on their tax returns.” Note: An RRSP is sometimes referred to as an RSP (Retirement Savings Plan).

  2. When’s the RRSP contribution deadline for the 2018 tax year?

    Correct

    Right on the money! You have until March 1, 2019, to make an RRSP contribution for the 2018 tax year. Consider making a lump sum payment now, and set up automatic monthly withdrawals going forward.

    Incorrect

    Not quite! You have until March 1, 2019, to make an RRSP contribution for the 2018 tax year. Consider making a lump sum payment now, and set up a Continuous Savings Plan to make automatic monthly withdrawals going forward.

  3. What is the maximum RRSP contribution limit for 2018?

    Correct

    Nice work! The maximum is $26,230. However, your personal contribution limit may vary based on factors such as your earnings and past contributions. To confirm your personal deduction limit, review your 2017 tax return, or log into the Canadian Revenue Agency (CRA) website.

    Incorrect

    Close but no cigar! The maximum is $26,230. However, your personal contribution limit may vary based on factors such as your earnings and past contributions. To confirm your personal deduction limit, review your 2017 tax return, or log into the Canadian Revenue Agency (CRA) website.

  4. Your personal contribution limit is based on _______ of your earned income in 2017 (up to a maximum of $26,230, as discussed in question 3).

    Correct

    You’re 100% right! Your yearly RRSP limit is based on 18% of the previous year’s earned income, as Statistics Canada explains, “up to an annual maximum, plus any unused RRSP deduction room carried forward from previous years, less any pension adjustments that are associated with registered pension plans (RPPs) from prior year and any employer's pooled registered pension plan (PRPP) contributions for the given tax year." So if you've been holding back on contributing to your retirement savings, you may have a bit more room to spare.

    Incorrect

    Nope. This is how it works: Your yearly RRSP limit is based on 18% of the previous year’s earned income, as Statistics Canada explains, “up to an annual maximum, plus any unused RRSP deduction room carried forward from previous years, less any pension adjustments that are associated with registered pension plans (RPPs) from prior year and any employer's pooled registered pension plan (PRPP) contributions for the given tax year." So if you've been holding back on contributing to your retirement savings, you may have a bit more room to spare.

  5. When can you take money out of your RRSP early without penalty?

    Correct

    Nice one! The Home Buyers’ Plan allows qualified home buyers to take out up to $25,000 without penalty (so long as you pay it back within 15 years). The Lifelong Learning Plan allows you to withdraw up to $20,000 to go back to school full-time, with a yearly maximum of $10,000, and you have 10 years to pay it back (though minimum annual repayments are required).

    Incorrect

    You were halfway there! The Home Buyers’ Plan allows qualified home buyers to take out up to $25,000 without penalty (so long as you pay it back within 15 years). The Lifelong Learning Plan allows you to withdraw up to $20,000 to go back to school full-time, with a yearly maximum of $10,000, and you have 10 years to pay it back (though minimum annual repayments are required).

  6. As a general guideline, how much of your paycheque should you be putting toward your retirement?

    Correct

    Correct! It’s generally a good idea to put away 10% to 12% of your pre-tax income. If you can’t quite make it there, that’s OK, every little bit will help — and developing a habit of saving is the first step. If you can contribute more than your personal RRSP limit, you also have the option of putting money away for retirement in a TFSA (Tax-Free Savings Account).

    Incorrect

    It’s generally a good idea to put away 10% to 12% of your pre-tax income. If you can’t quite make it there, that’s OK, every little bit will help — and developing a habit of saving is the first step. If you can contribute more than your personal RRSP limit, you also have the option of putting money away for retirement in a TFSA (Tax-Free Savings Account).

  7. True or false: RRSP contributions can be used to reduce your tax burden.

    Correct

    You got it! RRSP contributions are tax deductible, which means by contributing, you can lower your annual taxable income and, in turn, your yearly income tax bill, which is especially helpful if you’re in a higher tax bracket one year. Essentially, you are deferring your taxes to a time when you’re making less money (for example, retirement!). Learn more about the essentials.

    Incorrect

    Not quite: RRSP contributions are tax deductible, which means by contributing, you can lower your annual taxable income and, in turn, your yearly income tax bill, which is especially helpful if you’re in a higher tax bracket one year. Essentially, you are deferring your taxes to a time when you’re making less money (for example, retirement!). Learn more about the essentials.

  8. How often should you consider contributing to your RRSP?

    Correct

    Nice one! It’s a good idea to make regular contributions to your retirement savings. Consider setting your annual budget, and paying yourself first. To make things easier, set up a Continous Savings Plan that lets you make monthly automatic withdrawals through your bank and make saving money for the future part of today’s routine.

    Incorrect

    Not quite! It’s a good idea to make regular contributions to your retirement savings. Consider setting your annual budget, and paying yourself first. To make things easier, set up Continous Savings Plan that lets you make monthly automatic withdrawals through your bank and make saving money for the future part of today’s routine.


Want to learn more about what a TFSA can do for you?