Registered Plans

RRSP

A Registered Retirement Savings Plan is a government approved plan through which you save money for your retirement years. Your contributions, within limits, are tax deductible and the income earned is tax sheltered. You can have any number of plans. Anyone with “earned income” subject to Canadian taxation, including non-residents, may contribute to an RRSP. In addition, you have the peace of mind knowing that each RRSP plan is Deposit Insurance Corporation of Ontario insured to $100,000.00.

RRIF

Contributions to an RRSP will result in a substantial accumulation of savings. In the calendar year in which you reach age 69 you must either purchase a retirement income option or withdraw your funds. The Income Tax Act provides three retirement income options: RRIF (Registered Retirement Income Fund), Term Certain Annuity to Age 90 and Life Annuity. In addition, you have the peace of mind knowing that each RRIF plan is Deposit Insurance Corporation of Ontario insured to $100,000.00.

RESP

RESP is a registered education savings plan that permits savings to grow tax-free until the beneficiary (child) is ready to go full-time to college, university or any other eligible post-secondary educational institution. When the student begins to use the RESP for education purposes, the income accumulated on the subscriber contributions and the grant becomes taxable. However, because students typically have little or no other income, they effectively pay little or no tax on RESP income.

Parents and grandparents can contribute up to $4,000 annually for an overall total of $42,000 per beneficiary. Effective January 1, 1998, the federal government provides a Canada Education Savings Grant equal to 20% of the first $2,000 of each annual contribution to an RESP for children up to the age of 17.

HBP

The Home Buyer’s Plan is a program that allows you to withdraw up to $20,000 from your registered retirement savings plans to buy or build a qualifying home. Withdrawals that meet all applicable HBP conditions do not have to be included in your income and your RRSP issuer will not withhold tax on these amounts. If you buy the qualifying home together with your spouse or other individuals, each of you can withdraw up to $20,000.00.

Under the HBP, you must repay all withdrawals to your RRSPs within a period of 15 years. You will have to repay a minimum prescribed amount to your RRSPs each year until you have repaid the entire balance you withdrew. Any amount not repaid for a particular year will be included in your income for that year.