Registered Retirement Savings Plans (RRSPs)

It's sometimes hard to imagine that the financial decisions we make today can have an impact on our retirement.  Competing demands make it difficult to even consider investing for something that seems so far away. Let us show you how you can free up more money for your retirement.

           

What is an RRSP?

A Registered Retirement Saving Plan (RRSP) is a government approved plan that allows individuals to save for retirement.

Contributions are tax deductible and can be made by the annuitant (owner) or the contributor (spouse) throughout the tax year. Income earned within an RRSP is tax sheltered.

 

NOTE: Government changes to RRSPs and RRIFs

Recently, the federal government approved a change under Bill C-52 to the maturity age of an RRSP. With this change, you now have until December 31 of the year you turn 71 (previously age 69) to convert to a plan that allows you to draw on the money you saved in your RRSP. Typically, RRSPs are converted to Registered Retirement Income Funds (RRIFs).

 

Who can contribute to an RRSP?

If you are a Canadian taxpayer, 71 years of age or younger, and you have past earned income, you are eligible to contribute to an RRSP. Non-residents who pay Canadian income taxes also qualify.

 

How much can I contribute?

Annual contributions are determined based on 18% of the contributor's earnings up to a limit.

Contribution Limit
2008	$20,000
2009	$21,000
2010	$22,000
2011	$22,450

Interest income earned within the RRSP is tax sheltered. Any unused portion of the annual contribution limit may be carried forward to future years.

 

How do I find out my personal Contribution Limit?

Your RRSP contribution limit can be found on your previous year's Notice of Assessment (NOA). The Canada Revenue Agency (CRA) sends this out every year after you complete your taxes to show what your limit is for the current year.

You an also call the CRA T.I.P.S. line (1-800-267-6999).

This service is available from mid September through the end of April. All callers must provide S.I.N., date of birth and total income from line 150 of the previous year's income tax return.

 

What is a spousal RRSP?

A spousal RRSP is simply a registered investment that is made in the name of your spouse. A spousal RRSP is most advantageous when one spouse is expected to have a higher income at retirement than the other, and as a result, will be in a higher tax bracket. The spousal RRSP reduces the income tax of the higher-income spouse and reduces the overall taxes paid at retirement.

             Benefits:

• A smart way to reduce the income tax on the higher-income spouse and reduce the overall taxes paid at retirement.
• The spouse with the higher income contributes to a spousal RRSP. The contributing spouse claims the tax deduction and the lower-income partner owns the plan.
• When the lower-income spouse withdraws that money, it is considered his (or her) income and is taxed at a lower rate (some exceptions may apply).
• To be eligible, you must be legally married or be in a common-law relationship as defined by the Income Tax Act.

 

Get Your RRSP Growing Now

While it's never too late to begin investing in an RRSP, it pays to start investing early. The advantages of investing early include a longer time to grow your retirement savings, the benefit of compound interest and tax-free savings, when you keep your investment in an RRSP.

Start investing at age	30	40	50
Years to save	35	25	15
Total value of investment ($100/month)	$113,609	$59,550	$26,728
Total value of investment ($200/month)	$227,218	$119,101	$53,457
Total value of investment ($300/month)	$340,827	$178,652	$80,186

Savings to age 65. Assumes an investment of $100, $200 or $300 per month and an average annual compound rate of return of 5%. Assumes investment is held in an RRSP.

 

You can find more information on such things as RRSP contribution limits, withdrawal information and pre-retirement planning strategies in the Learning Centre. 

 

Saving for your retirement is an important part of your financial decision making. Call your branch today to talk with an Investment Specialist about an RRSP plan that fits your needs.

 

FirstOntario provides Members investing in RRSPs with a variety of products and options from guaranteed investments and mutual funds to RRSP loans. Regardless of the type of investment you would like to make or your retirement timelines, FirstOntario provides:

• A variety of products
• Competitive rates
• Personal service

  Guaranteed Investments

  Term Deposits are fixed investments that offer a guaranteed rate of return. For many people, secure and guaranteed products such as term deposits play an important part of their RRSP investment. FirstOntario offers one of the industry's best mix of RRSP Term Deposits that can serve as the backbone for your investment plan.

Short term:

30 to 364 day short-term deposits with interest paid at maturity

Minimum investment of $5,000 for non-redeemable deposit

Long term:

1 to 5 year long-term deposits with interest compounded annually

Minimum investment of $500 for redeemable and non-redeemable deposit

Special term deposits at special rates

Cashable:

1 year term with interest paid at maturity

Minimum investment of $500

FirstOntario offers other guaranteed growth investments. Find out more at Guaranteed Investments.

Mutual Funds**

Whatever your investment profile, Mutual Funds can provide the potential for greater returns than term deposits. Mutual Funds can allow you to diversify your investment portfolio, depending on your investor profile.

FirstOntario members have access to mutual funds through Credential Asset Management Inc. and Credential Securities Inc. that provide:

• Potential for greater returns
• Access to over 1,000 top name mutual funds
• Well-known funds such as AGF®, Fidelity Investments® and AIM TRIMARK®
• A family of socially responsible funds offered under Ethical Funds®
• Invest in a portfolio fund with Credential® Select for as little as $2,500 that allows you to take the guess work out of deciding which funds match your investor profile

 

Rates subject to change at any time.

*Available on new RRSP contributions only.

**Mutual Funds are offered through Credential Asset Management Inc. and mutual funds and other securities are offered through Credential Securities Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fundinvestments.  Please read the prospectus before investing.  Unless otherwise stated, cash balances, mutual funds and other securities are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer that insures deposits in credit unions.  Mutual funds and other securities are not guaranteed, their values change frequently and past performance may not be repeated.  Credential Securities Inc. is a Member - CIPF.

See Mutual Funds** for more information.

Index Link

The FirstOntario S&P/TSX 60™ Index Link is a term deposit with a twist. It is like a term deposit because it offers you the security of principal protection, yet you get to take advantage of any gains in the stock market index.

 

The Index Link deposit is an easy way to diversify your portfolio and offers:

• Performance - returns are based on the S&P/TSX 60 with unlimited UPSIDE potential without the DOWNSIDE
• Security - no matter what happens, your principal is guaranteed
• Benefits - take advantage of stock market index gains without the risk. A good way to diversify your portfolio.

See Index Link for more information.

 

RRSP Investment Savings Account

The new Registered Investment Savings Account allows you to make regular deposits to an RRSP account, even when you don't have a minimum amount to invest.  With our great rates, you can still invest in your RRSP but in smaller amounts that work better for your budget. 

See RRSP Investment Savings Account for more information.

 

RRSP Loans

Save money today and invest in your future.  Help your retirement savings grow with loans as low as prime.

You can find more information on RRSP Loans here.

RRSP Loans at Prime

• When you want to invest and don't have the funds available
• Allows you to save money today and invest in tomorrow with loans as low as Prime (when the investment is held at the credit union as security).
• Only available during the RRSP season
• Maximize your RRSP tax deduction and use the tax refund to help pay off the loan
• Terms from 1 to 5 year

Marginal tax rate	40%
RRSP loan amount	$3,000
RRSP loan interest rate over the term	6%
Loan term	12 months
Monthly loan payments	$258.20
Tax benefit	$1,200.00
Total loan interest over the term	$98.40
Net benefit	$1,101.60

For illustrative purposes only. Based on Prime at 6% future value.

RRSP "Top Up Loans"

Many Canadians aren't able to maximize their yearly RRSP contributions. If you want to maximize your tax return, consider a FirstOntario "Top Up Loan".  For those who qualify, this loan makes it easier than ever to take advantage of your unused RRSP contributions with convenient repayment terms of up to 10 years.

• When you want to take advantage of unused contribution room
•  Usually for larger amounts of money (maximum $25,000)
• Maximize your RRSP investment and your tax deductions
• Convenient repayment terms of up to 10 years