It’s become an annual event every February. As the deadline approaches, people line up at the doors of their financial institution or investment professional to make their contribution to their RSP. It may be human nature to put things off to the last minute, but it is usually easier to plan ahead, especially for something as important as your retirement.
 
Every investment professional will say you should start planning for retirement as early as you can and to pay yourself first. You can do this by an automatic withdrawal from your account starting a Pre-Authorized Contribution Plan with as little as $50 a month.
 
Ideally you should maximize the contribution room you are permitted, to take full advantage of the tax deduction allowed and to ensure you are putting enough away for a comfortable retirement. Realistically though, we have to budget our money to service our debts, plan for that holiday, save for our children’s education, as well as save for retirement. To get on the right track, this is where it’s nice to sit down with an investment advisor to help make sense out of it all and to help determine what your priorities are.
 
2008 RSP Tips

• For the 2007 tax year, the current RSP contribution limit is 18% of your previous year’s “earned income” to a maximum of $19,500. Your “earned income” as defined by the Canada RevenueAgency (CRA) includes salary or wages, rental income, alimony received, net business income and disability benefits paid by the Canada Pension Plan. Earned income does not include investment income, retiring allowances or severance pay, taxable capital gains, or pension income.
• Any unused RSP contribution room after 1990 can be carried forward indefinitely. Check your Notice of Assessment from the Canada Revenue Agency (CRA) from last year’s return for the total allowable contributions you are carrying forward.
• The last day for contributions for the 2007 tax year is February 29, 2008.

 
February 13, 2008