Answers to your RRSP Questions
You are allowed to contribute 18% of earned income to an RRSP and there is no time limit for how long you can carry forward unused contribution room. You have 60 days after year-end to make an RRSP contribution and claim a deduction for the previous tax-year. There is no limit to how many RRSPs you can have and you are eligible to over contribute a maximum of $2000.00 in a lifetime without incurring a penalty.
Remember, if you decide to withdraw money from an RRSP, you will need to pay taxes on that money. However, it is not necessary to claim an RRSP deduction for the year in which the contribution was made and there is no time limit for how long you can carry forward unused contribution room.
Under the Lifelong Learning Plan, the interest rate is zero on an RRSP loan. You have 15 years to repay loans under the Lifelong Learning Plan and the Home Buyers’ Plan. It is advised to review your RRSP investments every three months. The government places no limitations on the use of money borrowed under the Lifelong Learning Plan.
If you are thinking about whether or not a TFSA or an RRSP is a better choice, remember the following: A TFSA is a better choice if you expect your income in retirement to be higher than it is now, if you expect to apply for the Guaranteed Income Supplement when you retire and/or if you have a defined benefit pension plan.
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