It’s Time to Get your RRSP Back into High Gear
At this time of year, newspaper headlines and advertisements are shouting
for investors’ attention, reminding us all that the RRSP deadline is fast approaching. And they’re right —
it is time to top up your RRSP and take full advantage of the tax break and any future tax-sheltered gains.
Fortunately, when you have a financial plan and invest regularly, the RRSP
deadline doesn’t have to come with any stress. There may be a need, however, to review your portfolio, and ensure that
your asset mix is still in keeping with your long-term plan and overall risk tolerance.
With the markets looking up, there’s a new sense of optimism as we
approach this year’s Registered Retirement Savings Plan (RRSP) deadline.
Remember, your contribution provides three important benefits:
- Immediate tax savings.
Contributions are tax-deductible. A $1,000 contribution generates a $400 tax benefit for someone in the 40% bracket.
- Tax-sheltered growth.
Your money compounds tax-free until withdrawn. That’s particularly useful for interest-bearing investments that
would otherwise be fully taxed each year.
- Security in retirement.
RRSP’s provide an opportunity for those with an inadequate or no employment-based pension plan to ensure they’ll
have sufficient funds in retirement.
Contributions made through February 2004 are tax-deductible for 2003. You
can contribute up to 18% of your previous year’s earned income, to a maximum of $14,500. If you’re in a "defined
benefit" pension plan at work, your limit will be adjusted downward to reflect these employment-based contributions.
The Notice of Assessment for your 2002 income tax return shows your contribution
limit, or you can call the tax department’s information line at 1-800-267-6999.
You can also contribute now for 2004. The maximum is 18% of your 2003 earned
income or $15,500. You reach the $15,500 ceiling at an earned income of $86,111.
If you’re having difficulty coming up with the cash to contribute,
you may want to consider borrowing. At this time of year, RRSP loans are available at reasonable rates. Professional advice
can help you determine whether borrowing is an appropriate strategy for your situation.
If you would like to meet to fine-tune your plan, or to discuss how you
can maximise your contributions for this year, call Money Concepts at 506.778.8446.
Money Concepts "Generating Wealth for Generations"
1808
Water Street, Miramichi, NB E1N 1B6
Tel: 506.778.8446
Fax: 506.778.8459
