CIBC's Jamie Golombek's provides advice to make the most of your RRSP
TORONTO, Feb. 19 /CNW/ - It's that time of year again! With just two
weeks left in the 2008 RRSP season, many Canadian investors may still be
wondering what they can do now to prepare for retirement down the road.
"When it comes to growing your retirement nest egg, there's still no
better investment vehicle than an RRSP," says Jamie Golombek, Managing
Director of Tax and Estate Planning for CIBC. "And with the right approach and
the right advice, you can take full advantage of all the benefits the RRSP has
To help make the most of your RRSP contribution before the March 2nd
deadline, Golombek offers the following tips.
Know your contribution limits
- As RRSP contributions are 18% of an individual's earnings from the
prior year the amount of income needed in 2008 to generate the
maximum contribution room of $21,000 for 2009 is $116,667.
- If you wish to save more than your RRSP contribution limit allows,
consider opening a Tax-Free Savings Account or 'TFSA', in addition to
your RRSP. A TFSA will allow you to put aside an additional $5,000 in
eligible investments per year to grow tax-free within the account. An
added benefit of a TFSA is that unlike an RRSP, your funds will not
be taxed upon withdrawal.
Consider contributing to a Spousal RRSP
- Higher-income earners can take advantage of their lower-income spouse
or partner's tax rate upon ultimate RRSP withdrawal by contributing
to a Spousal RRSP and receiving a tax deduction for contributions
made to their spouse or partner's plan.
- While a Spousal RRSP does not allow an individual to exceed their
personal RRSP maximum contribution threshold (which can be allocated
between the individual's own account and that of their spouse), a
spousal contribution will not interfere with the other spouse's or
partner's own RRSP limit.
Take advantage of other RRSP benefits
- RRSPs are useful for more than just retirement and offer additional
advantages to investors. For example, first-time homebuyers can
withdraw up to $25,000 tax-free from an RRSP under the Home Buyers'
Plan (HBP) and repay the funds, interest-free, over a 15 year period.
Failure to repay will cause the amount to be included in income.
- You can also withdraw up to $10,000 in a calendar year and up to
$20,000 in total from an RRSP under the Lifelong Learning Plan (LLP)
to finance training or education for yourself or your spouse or
partner. The LLP withdrawal needs to be repaid, interest-free, over a
10-year period to avoid having to include it in your income.
Plan ahead to get the most out of your RRSP
- Avoid withdrawing funds from your RRSP to pay down short-term debts.
Your contribution room will be permanently reduced and you may end up
paying more in tax than what you initially saved as a deduction. For
short-term funding needs, consider the new TFSA.
- Always consider the long-term earnings potential, level of risk and
suitability of any investment before adding it to your plan.
- After making your RRSP contribution, immediately apply to the CRA for
a reduction of payroll tax at source. This way your refund is
credited to you throughout the year with each paycheque, instead of
waiting for it to arrive in 2010.
- The worst mistake by far is failing to contribute to an RRSP at all
if you can afford to do so. Don't be among those approaching
retirement who regret not investing more earlier on.
"Above all this RRSP season, have a plan and consult a professional,"
Golombek advises. "Allow yourself enough time to properly weigh your options
and build a well-diversified RRSP portfolio that will help you retire on your
For more information please visit your nearest CIBC branch or
CIBC is a leading North American financial institution with nearly 11
million personal banking and business clients. CIBC offers a full range of
products and services through its comprehensive electronic banking network,
branches and offices across Canada, in the United States and around the world.
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Centre on our corporate website at www.cibc.com.
For further information:
For further information: or to interview Jamie Golombek, contact Doug
Maybee, Director, External Communications and Media Relations, CIBC, Tel:
(416) 980-7458, email@example.com