RSP’s Getting you Confused?

I completed my RSP contribution for 2011 last weekend and after doing a few researches online, I thought that I had acquired some helpful knowledge that might be worth sharing. But please when reading this, please remember that I’m not an expert nor an adviser and that this should be considered as an introduction to the world of Retirement Savings Plan.

So, for more information it could be a good idea to consult an expert before doing your RSP.

RSP Basics

A Retirement Savings Plan (RSP) can be defined as an investment account that is designed for savings to be used in your retirement years. The Canadian government offers great tax benefits on RSP accounts, which means it can truly help reducing your tax contribution. Indeed, an RSP account allows you to tax-defer a maximum amount of money every year, see the below section to find out what is your maximum contribution allowed.

Even though the aim of an RSP is to save for your retirement years, there are some exceptions where you can withdraw money from it without having to pay any penalty. Canadians can use a maximum of $25,000 from their RSP to buy a house without paying any interest on this amount, as long as it is reimbursed withing 15 years. You can also use a portion of your RSP if you’re going back to school full time, I’m not sure about the maximum amount or the reimbursement conditions though.

RSP Deadline 2011

This is something that never changes every year, so it’s probably a good idea to write it down. You need to contribute to your RSP before March 1st of the following year of your taxes declaration. For example, for the 2011 fiscal year, any amount invested in your RSP before the 1st of March 2012 can be declare in your 2011 declaration. This gives you exactly 8 days to contribute to an RSP.

What is your RSP Maximum Contribution?

There are various ways to calculate what is the maximum contribution you can make to your RSP this year. The first and easiest one, I think, is to check the ‘RSP Deduction Limit Statement’ on your latest notice of assessment or reassessment. We also normally receive a T1028 called ‘Your RSP Information for 2011’ after our last tax return where this information is indicated. If you can’t retrieve any of these documents, the Government of Canada offers a great online and phone service to help you.

What Kind of RSP Account Can you Get?

There are various kinds of RSPs that you can choose from. When choosing which kind of RSP you want to get, consider a few things: first when do you plan to use it? only at your retirement or before to buy a house? Also, do you want to have access to your money at any time? And, what is your risk tolerance? There are probably a bunch of other factors to consider but you will need to consult your investment adviser for more information.

RSPs can be mutual funds, common and preferred shares of Canadian corporations, fixed income securities (including bonds, debentures, strip bonds and notes), foreign shares, Canadian and Provincial Treasury Bills, Canada Savings Bonds, Provincial Savings Bonds, Term Deposits, GICs, Options to purchase eligible securities and mortgages. There might also be more options, I hope I didn’t forget anything.

How to Set Up your RSP Account?

There are a few different ways to set up your account and start saving for your retirement. One of the easiest ways is to meet with an investment adviser at your bank and to make a plan for your retirement. And the sooner you start to save, the easier it is.

If you don’t have time to schedule a meeting this week, I recommend you have a look to your bank’s website as they normally have all the information you need. They give you details on the different RSPs available and answer a lot of questions in their FAQ section. You can then phone them to open an RSP account and ask for a certain amount of money to be transferred to your RSP. Or some banks also allow you to do everything online, which is my preferred option.

My Personal Experience

I’ve been using ING Direct Canada for the past few years for my RSP contributions. I personally really like them as their interest rates and products are among the best ones in the industry and their service is excellent. You can basically do everything online and it literally took me 3 minutes to do my RSP contribution this year. Setting up an account the first year might take you longer though. I only need to phone them once and I had a great service.


My first recommendation is to check your bank’s website, but if you don’t find what you’re looking for, here are other places that provide some helpful information.

Government of Canada

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