Will I lose my RESP if I file a Consumer Proposal?
No, you will not lose an RESP in a Consumer Proposal. In a Consumer Proposal, you are making an offer to your creditors to settle your debt to them based on the terms of your offer. The terms of your offer is usually that you are prepared to pay a percentage of your debts over a period of time–usually 60 months with no interest. It is rare that the creditors will ask that you collapse the RESP to pay the money into the proposal. Even if they ask, you have the right to refuse.
Please see related article – Will I lose my RESP in a Bankruptcy?
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.