Thoughout our 25+ year’s of completing Income Tax Returns, we are still amazed that there are financial institutions that sell RRSP’s to clients who do not even know what they are getting,
……………well except a Tax Refund!
So here we are going to attempt to explain to everyone what a RRSP is.
Please be Advised 1 2
OBS Financial is a full service Wealth Management Company, offering services in Investments, Insurance, Income Tax, Business Solutions and Mortgages.
1Although we make every effort to provide unbiased information, we would like to advise our readers that we do have liscensed Advisors who offer investment products such as RRSP’s, RESP’s, TFSA’s and Non Registered investments as part of our products line. The companies that we deal with compensate us for placing your investements.
2The Information on the page is posted for illistration purposes only, and SHOULD NOT be construed as Income Tax or Investemnt advice as you will soon see, every situation is different for every client and without a full understanding of a clients entire financial and income situation, no information can be accurate. We advise that all readers seek out professional advise from a licensed and well trained Wealth Management Advisor.
What is a RRSP?
- A RRSP is a Registered Retirement Savings Plan.
- It can be made of of almost any types of investments, providing that the promoter has registered the investment account as a RRSP for tax Purposes
- It provides you with a way to not pay tax on the amounts now
- The taxation on the money does not occur until you withdrawal the amounts
RRSP’s – An Investment with PRE-TAX Dollars
What is Pre- Tax Dollars?
- Pre Tax Dollars is income that you have earned that has not been taxed
- When you invest with Pre-tax Dollars inside of a Registered Savings Plan, the Money that is invested and the Investment returns have yet to be taxed
- This allows you to invest more money, and get better returns as you get to invest the governments portion as well.
The Taxation Of RRSP’S
- Since the RRSP’s are in Pre-Tax Dollars, when you withdraw them, or de-register them the money inside becomes taxable as you take it out.
- The trickiest part of investing in RRSP’s is understanding, when to put the money in, and when to take the money out.