Canadians! What is RRSP?

[Bluga]

Where can i get more info on this? Is it like the IRA in the states?

 

[MomAndSkoorbaby]

It is a Registered Retirement Savings Plan....more like a 4019(k) in the states I believe! Also known as mutual funds....

Sorry I don't know more....all I know is that we are sinking money into both 401(k) and RRSP to cover both angles!

 

[Talon]

rrsp.org

 

[Bluga]

I'm still a student, can i open RRSP account?

 

[MomAndSkoorbaby]

Originally posted by: Bluga
I'm still a student, can i open RRSP account?

Yes. Skoorb and I started when we were both still students.

 

[Bluga]

ok so basically it's an account for you to buy mutual fund?
How does that saves you tax?

 

[N8Magic]

Originally posted by: Bluga
ok so basically it's an account for you to buy mutual fund?
How does that saves you tax?

You get a tax refund when you submit your taxes at the end of the year for any monies put into the RRSP. Keep in mind that there is a tax-free contribution limit based on your income, but most people never max it out anyways.

In a nutshell, you don't pay tax on your RRSP money until you take it out at age 65+. By not paying tax until you take it out you are putting more money in, and that larger sum of money will grow faster. Another benefit is the fact that you can take some of this money out tax-free for the down-payment on your first home, BUT you must repay it within 5 years (?) or there are penalties.

 

[Bluga]

Originally posted by: N8Magic

Originally posted by: Bluga
ok so basically it's an account for you to buy mutual fund?
How does that saves you tax?

You get a tax refund when you submit your taxes at the end of the year for any monies put into the RRSP. Keep in mind that there is a tax-free contribution limit based on your income, but most people never max it out anyways.

In a nutshell, you don't pay tax on your RRSP money until you take it out at age 65+. By not paying tax until you take it out you are putting more money in, and that larger sum of money will grow faster. Another benefit is the fact that you can take some of this money out tax-free for the down-payment on your first home, BUT you must repay it within 5 years (?) or there are penalties.

So i actually get money (tax) back every year if i have RRSP? But can i take it out before 65+(not including down payment)?

Assume i put in $1000 every year, what will i get?

 

[Sealy]

There are different kinds of rrsp's too. You can have a non-registered fund as well as registered also there are segregated funds. Non-registered means you can take them out whenever you feel like it and not be penalized. Registered means when you want to take them out you will be taxed on them. Segregated funds are mutual funds that use dollar cost averaging. This means over a long period of time you will always be increasing your investment because when funds go down you buy more stock for your money then if stocks were higher. The best thing to do is to talk to a financial advisor, Not the Banks! It's free for a consultation and they will get you into something that is right for you not what's right for the bank! Whew! Hope this helps

Also how it saves you tax is by deferring it every year, you don't claim it as income so you don't get taxed on it. Even when you are retired and you want to take it out, yes you pay tax, but only a certain percent and you've got a lot of money in the account by then so ultimately you will be paying less tax then if you did not have an rsp.

 

[Bluga]

sounds great, are there anymore good sites that i can searach into?