What the RRSP gives you
A plan that's simple to understand, with an immediate effect on your taxes and a lasting effect on your retirement.
Immediate tax deduction
Every dollar contributed and deducted lowers your taxable income. The effect depends on your marginal tax rate.
Tax-sheltered growth
As long as the money stays in the plan, growth is not taxed. Nothing to report each year.
Extra protection
Your RRSP is an insurance contract: a guarantee of 75% to 100% of the amounts invested at maturity or on death depending on the contract, a named beneficiary, and a transfer outside the estate.
Unused room carries forward
Room you don't use in a given year carries forward to later years. Nothing is lost.
Segregated-fund RRSP or bank RRSP?
Both give you the same tax deduction and the same tax-sheltered growth. The difference lies in what happens if markets drop, if you die or if you have creditors.
Segregated-fund RRSP At AG | Bank RRSP In mutual funds or GICs | |
|---|---|---|
| Tax deduction and tax-sheltered growth | Yes | Yes |
| Capital guarantee | 75% to 100% at maturity or on death, depending on the contract (withdrawals can reduce it) | None for mutual funds; capital guaranteed for a GIC, with a return set in advance |
| Beneficiary named in the contract | Yes | Not in Quebec: through your will |
| Payout on death | Directly to the beneficiary, outside the estate | Goes through the estate |
| Protection from creditors | Possible under certain conditions, notably if the named beneficiary is your spouse, a child or a parent | Generally not |
| Fees | Higher: the guarantees have a cost, built into the fund's fees | Generally lower |
| Talk it over with Alexandre |
A segregated fund is not an ordinary investment account: its value tracks a portfolio and can go down, and no rate of return is guaranteed. It mainly makes sense if the guarantees, the beneficiary and creditor protection matter to you. Alexandre will tell you frankly if that's not the case.
RRSP or TFSA: which one based on your income?
The RRSP is generally more advantageous when your tax rate today is higher than the one you'll have in retirement. The TFSA often is when your income is modest or you'll need the money before retirement.
High income this year
The RRSP deduction is worth a lot; your tax refund can then go into your TFSA.
Modest income or start-up years
The deduction is worth less; the TFSA keeps your RRSP room intact for the years when you earn more (it carries forward).
Income that varies from year to year (self-employed)
TFSA in lean years, RRSP in strong years. You can wait until you know your income: a contribution made in the first 60 days of the year counts for the previous year.
Also consider: In retirement, RRSP withdrawals are added to your income and can reduce certain income-tested federal benefits; TFSA withdrawals don't.
See the TFSA pageGeneral information. The right choice depends on your actual tax rate, your age and your plans; review it with Alexandre and, if needed, your accountant.
Your RRSP strategy,
without leaving home.
Alexandre reviews your situation and calls you back with a personalized recommendation. Free, no obligation.
The analysis is free. If you sign up, Alexandre is paid a commission by the insurer or product provider.
Who is it useful for?
Cut your taxes
while saving for yourself.
The RRSP can give you a tax deduction as early as the year you contribute, while letting your savings grow tax-sheltered until retirement.
The long-term effect of an RRSP
Take someone whose 18% of earned income is above the annual limit. Their limit is therefore the amount set by the CRA, every year.
They don't contribute. Their room isn't lost: it adds up from one year to the next. But the money didn't work tax-sheltered during that time.
Fictional example, for illustration only. No rate of return is shown or implied. Your actual room depends on your earned income and appears on your notice of assessment. Source: Canada Revenue Agency.
The Alexandre advantage
No bureaucracy, no call center. Alexandre takes the time to understand your situation and offers solutions that truly fit you.
Before any recommendation, Alexandre establishes your investor profile. See how he works
