{"id":1249,"date":"2021-02-10T09:30:14","date_gmt":"2021-02-10T14:30:14","guid":{"rendered":"https:\/\/fortax.ca\/?p=1249"},"modified":"2021-02-10T09:30:14","modified_gmt":"2021-02-10T14:30:14","slug":"avoid-these-top-5-rrsp-mistakes","status":"publish","type":"post","link":"https:\/\/evolvethought.com\/fortax\/2021\/02\/10\/avoid-these-top-5-rrsp-mistakes\/","title":{"rendered":"Avoid These Top 5 RRSP Mistakes"},"content":{"rendered":"<style>\n.page-title-inner {display: none;}\n.entry-header-text-top {display: none;}\ndiv#comments {display: none;}\n.entry-author {display:none;}\nfooter.entry-meta {display: none;}\n.subul {margin:0;list-style:revert;}\n<\/style>\n<h1>Avoid These Top 5 RRSP Mistakes<\/h1>\n<p>Are you contributing to your Registered Retirement Savings Plan (RRSP) for the tax deduction? This smart tax tactic is just one of many benefits. However, avoid these 5 mistakes to keep your RRSP strategy on track.<\/p>\n<p><strong>Missing the deadline<\/strong><br \/>\nYou have until March 1st to make your contribution and reap that tax deduction for your 2020 return. Canada Revenue Agency (CRA) offers a 60- day deadline extension, but no longer. So, get your contribution in on time.<\/p>\n<p><strong>Confining it to cash<\/strong><br \/>\nGet your plan working harder. You can hold many types of investments in your RRSP, including stocks, guaranteed investment certificates, mutual funds, and bonds. All growing tax deferred.<\/p>\n<p>So, hit that important contribution deadline, then sit down with your Financial Advisor to develop a winning plan of solidly performing investments to grow your wealth.<\/p>\n<p><strong>Tapping into your fund<\/strong><br \/>\nYour RRSP is sitting there, happily compounding growth. You face too many bills or dream about a big-ticket item you want. But don\u2019t treat this account as your savings plan.<\/p>\n<p>Withdrawing money means short-circuiting its future growth; and you can\u2019t replace that lost contribution room. You also face a double tax hit. First, a withholding tax upon withdrawal. Then, your self loan is added into your taxable income.<\/p>\n<p>Note that the <a href=\"https:\/\/www.canada.ca\/en\/revenue-agency\/services\/tax\/individuals\/topics\/rrsps-related-plans\/what-home-buyers-plan.html\" rel=\"noopener noreferrer\" target=\"_blank\">Home Buyers\u2019 Plan<\/a> and <a href=\"https:\/\/www.canada.ca\/en\/revenue-agency\/services\/tax\/individuals\/topics\/rrsps-related-plans\/lifelong-learning-plan.html\" rel=\"noopener noreferrer\" target=\"_blank\">Lifelong Learning Plan<\/a> are two exceptions to this taxation rule.<\/p>\n<p><strong>Saving too much<\/strong><br \/>\nYou can put 18% of pre-tax earned income in your RRSP, up to a limit of $27,230 for 2020. You can carry forward room from previous years. (Your notice of assessment from the CRA will tell you how much). That\u2019s it.<\/p>\n<p>CRA allows a $2,000 buffer against possible errors, such as not factoring in a workplace pension plan or deferred profit-sharing plan. After that, you face a penalty of 1% per month until you correct your mistake. Take a look at box 52 on your T4 slip to see if this applies to you.<\/p>\n<p><strong>Spending your tax refund<\/strong><br \/>\nYou will leverage powerful growth, through the magic of compounding, by reinvesting your refund. Spending that cash will starve your fund of this potential growth; you will miss a great opportunity to grow your wealth.<\/p>\n<p>Keep your RRSP strategy on track. Ask your Financial Advisor to help you plan a high-growth, low-tax strategy for your money.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Avoid These Top 5 RRSP Mistakes Are you contributing to your Registered Retirement Savings Plan (RRSP) for the tax deduction? This smart tax tactic is just one of many benefits. However, avoid these 5 mistakes to keep your RRSP strategy on track. Missing the deadline You have until March 1st to make your contribution and&#8230;<\/p>\n","protected":false},"author":1,"featured_media":1251,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"footnotes":""},"categories":[72],"tags":[],"class_list":["post-1249","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-fortax-blog"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/evolvethought.com\/fortax\/wp-json\/wp\/v2\/posts\/1249","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/evolvethought.com\/fortax\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/evolvethought.com\/fortax\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/evolvethought.com\/fortax\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/evolvethought.com\/fortax\/wp-json\/wp\/v2\/comments?post=1249"}],"version-history":[{"count":0,"href":"https:\/\/evolvethought.com\/fortax\/wp-json\/wp\/v2\/posts\/1249\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/evolvethought.com\/fortax\/wp-json\/wp\/v2\/media\/1251"}],"wp:attachment":[{"href":"https:\/\/evolvethought.com\/fortax\/wp-json\/wp\/v2\/media?parent=1249"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/evolvethought.com\/fortax\/wp-json\/wp\/v2\/categories?post=1249"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/evolvethought.com\/fortax\/wp-json\/wp\/v2\/tags?post=1249"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}