Do you know what
you are going to contribute before the March 1 deadline?
RRSP's are such a fundamental part of many Canadians'
savings plans because they help us prepare for our financial future.
An RRSP allows you to save for retirement during your prime income
earning years. They generate tax savings because the contribution
you make to your RRSP reduces your taxable income during your
higher earning years. Your RRSP's tax-shelter the growth on your investment.
Income tax is paid on withdrawal, which is usually done at
retirement when you have a lower marginal tax rate. RRSP's help you
save for the long-term, but you can withdraw funds
anytime at your current tax rate.
It is currently RRSP season.
Are you ready
for the RRSP deadline of March 1, 2010?
Most Canadians
wait until this time of year to invest a lump sum into their RRSP to
offset their 2009 taxable income. It is this time of year that most
Canadians really evaluate their RRSP contributions and attempt to make
the most appropriate decision to not only save for their future but to
most effectively reduce their 2009 taxable income. This year is a
different RRSP season. The last two years has caused financial distress
to many Canadians and it is no wonder why many Canadians are still not
confident in the economy. This makes your RRSPs decision even more
important. Don’t let the pressure of the RRSP season result in rushed
RRSP decisions. Also keep in mind we also offer Seg funds with guarantees,
another smart way to give you some more stability in this economy. Ask us
how we can help you.
Here are a few
strategies for the 2010 RRSP season to maximize your RRSP contributions.
Do You Have Anything To Carry Forward? Make sure you are aware if you have made the maximum
contributions in previous years. If you are in a high tax bracket
and would like to reduce your 2009 taxes this may be a good time to catch
up. Remember you can carry forward any unused contribution room from
previous years. This is also good to remember if you are considering
starting an RRSP at a young age. If you cannot afford to contribute
the maximum limit do not let it stop you from beginning to save for
your retirement. You can always carry forward any unused
contribution room to your higher earning years. You can start now by
contributing as little as $25 a month, call us to get started!
What Is Your Current Tax Bracket? This could be beneficial when determining how much to
contribute to your RRSPs. If you just barely qualify for a higher tax
bracket determine how much you can contribute to your RRSP's to cause
your income to fall a tax bracket. If you are not in your highest earning
years, you may want to save the rest of the contribution room to use
against upcoming years when you may be making a higher income.
Borrow in Order to Reach Your Maximum. If you cannot reach the maximum contribution limit due
to the current struggles in the economy it may be a good idea to look
into borrowing money to reach the maximum. This is especially true if
your RRSP rate of return is potentially greater than your borrowing rate.
This strategy may result in a higher tax refund that can be used towards
paying down the loan. Many financial institutions offer quick
online loans to help you reach your maximums. Ask us if you should
consider borrowing.
Always Keep Savings In Mind. The amount you put into your RRSP will decrease
your taxable income. If you are in a 40% tax bracket you could be saving
almost half of your contribution in taxes. Also remember that when you
contribute to an RRSP you receive a tax credit that can result in a
higher tax return. Consider reinvesting your tax return into your RRSP if
you have the contribution room. If you do not have the room in your RRSP
you can use your tax return for a Tax Free Savings Account. For more
information on TFSA's visit our website or contact us.
Spousal RRSP's May Help Reduce Your Taxes. A spousal RRSP
can be used for income spitting. If one spouse earns significantly more
than another then the higher earning spouse can open an RRSP in a
spouse’s name. This is a way to split retirement income between both
spouses and will help reduce taxes.
Talk with us about what your strategy should be this RRSP
season
International Life Insurance
Do you have relatives or friends who do not live in Canada
but would dearly like to purchase a life insurance policy from highly
rated Canadian companies? At one time, Canadian companies allowed
applications to be submitted on non-residents of Canada but that practice
disappeared many years ago.
Svab Insurance Inc. has a relationship with Life
& Annuity Services Ltd., a Bermuda Based General Agency which has
access to high quality Universal Life insurance policies from Manulife
Financial and Sun Life Financial. These policies can be purchased on the
lives of residents of more than 120 countries in the world. There are a
few basic requirements.
- Only people aged 20 to 80
are eligible
- The minimum face amount
is $1,000,000 (US Funds)
- The minimum annual premium
is $10,000 (US Funds)
- All medical underwriting
must take place outside the country of residence of the potential
client
- Non medicals and
paramedicals are not allowed. There must be a physical examination
by a doctor
Want to know
more about this? Don’t
miss the next edition of the Svab Insurance Inc.
newsletter to discover more about how your relatives and friends who live
outside Canada can purchase policies from two very highly rated Canadian
insurance companies.
Life & Annuity
Services Ltd.
