Deadline approaching for contributions
It's nearing deadline time once again. The deadline for making your 2013 contribution to investments held in your Registered Retirement Savings Program (RRSP), that is. And, even though it is only a few days away, you have choices to make that can enhance your retirement nest egg and save on taxes. Here are a few last-minute RRSP tips.
RRSP deadline details
• March 3, 2014 at 11:59 PM is the deadline for contributing to investments in your RRSP for the 2013 tax year.
• You may make a maximum contribution of up to $23,820, depending on your earned income in 2013 (and minus your pension adjustment if applicable).
• You'll find your personal maximum allowable contribution on your most recent notice of assessment from the Canada Revenue Agency (on line (A) of the RRSP Deduction Limit Statement).
• You can carry forward unused contribution room from prior years.
• You can fill your unused contribution room in a single year or over a number of years until the end of the year in which you reach age 71(or the end of the year your spouse/common-law partner turns 71).
RRSP tax-saving, tax-deferring, income-building tips
• Maximize this year's RRSP contribution — Making your maximum allowable contribution each taxation year is the best strategy for tax savings and to maximize potential long-term growth.
• Maximize last year's RRSP contribution — Catch up on your unused contribution room as quickly as possible for additional tax savings and enhanced long-term growth.
• Borrow to gain — You could maximize this year's contribution or catch up on past contribution room with an RRSP loan. The money you borrow will generate a tax break and add to your tax-deferred RRSP growth potential. The key is to get a loan at a low interest rate and pay it back quickly. Use your extra tax savings to help pay off the loan. Split to gain If your spouse's income will be lower than yours over the next few years or in retirement, a spousal RRSP can generate retirement income that is subject to less tax. The plan is in your spouse's name but you contribute to it. Your total can't exceed your personal yearly contribution room but your spouse's limit is unaffected by your contribution.
The right RRSP strategies will save taxes and help you retire with more — but your RRSP alone is usually not enough to fund the retirement of your dreams. By adding in a well-balanced non-registered investment portfolio, you can get there comfortably. Your professional advisor can help make it happen for you.
This column, written and published by Investors Group Financial Services Inc. (in Québec — a Financial Services Firm), and Investors Group Securities Inc. (in Québec, a firm in Financial Planning) presents general information only and is not a solicitation to buy or sell any investments. Contact your own advisor for specific advice about your circumstances. For more information on this topic please contact your Investors Group Consultant.
Choosing the right financial advisor
(NC) — With RRSP season well underway, many Canadians are wondering whether it's time to seek financial advice. Here are some tips to help you choose an advisor that's right for you.
Since you will be relying on your advisor for information and guidance, it is important that you pick someone you find trustworthy, who helps you think about your life goals, who understands your investment needs, and who fully answers all of your questions.
Your advisor will help you create a plan that's right for you, review it with you regularly and remind you to stick with your plan so that your money can continue to grow. Studies have shown that people who have a financial advisor for 15 years or more, have more than double the savings of those who do not have advisors – mostly because simply having an advisor encourages people to save regularly and save more.
It is important to make sure that the individual is licensed. Licensed advisors are overseen by regulators and must complete education programs before and after they are registered to help them keep on top of new financial products, rules and regulations, and industry trends. Check regulators' websites to determine whether the individual has been the subject of any complaints or investigations.
There are rules requiring financial advisors to tell clients the range of products that they are licensed to offer, their qualifications, and how they are paid. Some financial advisors are paid by salary or through commissions, some through a separate fee paid directly by the client, and others might offer a choice of payment methods. Be sure that you understand the costs of your investments and the services your advisor offers.
Finally, the key to a good relationship with your financial advisor is good communication, so ask questions and update your advisor on any changes in your circumstances.
For more information, visit www.ific.ca/en/pg/investor-centre/ or your provincial securities regulator.
TFSA tips for young families
(NC) — Still wondering how to use a Tax-Free Savings Account to your best advantage?
“When you’re starting a family, setting financial priorities can be a challenge,” said Tannis Dawson, a tax and financial planning expert with Investors Group. “A TFSA is a flexible way to save and minimize your taxes at the same time.”
Dawson offers these TFSA tips for young families:
Save for emergencies and large short term expenses like a vehicle, vacation or home down payment without having to liquidate investments and paying taxes on the income.
Save for a home in addition to or instead of the RRSP Home Buyers Plan.
Save for education in addition to or instead of non-registered savings, the RRSP Lifelong Learning Plan or RESPs.
Save for your children: as a parent, you retain control of TFSA funds and when to disburse them.
Save to start a business: TFSAs are a tax effective way to save the initial equity you need and can be used as security for bank financing.
Save for retirement in addition to your RRSP contributions.
Source: This column, written and published by Investors Group Financial Services Inc. (in Quebec – a Financial Services Firm), presents general information only and is not a solicitation to buy or sell any investments. Contact a financial advisor for specific advice about your circumstances. More information on this topic can be obtained from your Investors Group Consultant.