Westoba Credit Union

Registered Retirement Savings Plan

It is never too early to start planning for your retirement! Set yourself up for success with a Registered Retirement Savings Plan (RRSP) and defer taxes on income earned off the investment.

What is it?

An RRSP is an investment product that helps you save for retirement by accumulating savings on a tax-deferred basis. The amount you can contribute yearly is based on your annual income.

Who is it for?

Any Canadian resident who is aged 71 or under, with a valid Social Insurance Number (SIN). You must have completed a Canadian Tax Return in the previous year, and have an income, to generate contribution room.

What are the benefits?

  • Income earned within an RRSP is not taxed until withdrawal.
  • Plan contributions provide a deduction against earned income for taxation purposes.
  • With Canada’s tiered tax rates, RRSPs can help you reduce taxable income during your highest earning years (while you’re employed) and pay tax when you are withdrawing them in your lowest earning years (retirement).
  • Funds are eligible for Canadian Government programs that can help you buy your first home or further your education.
  • Your investment income can include savings options, interest, dividends and capital gains.
  • You can create spousal plans that allow the higher earning spouse to contribute in the name of the lower earning spouse and still obtain the deduction from taxable income. At withdrawal, the funds are taxed at the lower income rate.

If you’d like more information regarding RRSPs please make an appointment with a Financial Planner today. Contact us today at 1-877-WESTOBA or infowcul@westoba.com.

What happens once the RRSP reaches maturity?

Legislation requires that your RRSP contracts mature before the end of the year you become 71. You will need to review your retirement objectives and choose options that will support your goals. Three primary options are:

  • Registered Retirement Income Funds (RRIF)
    A RRIF is an investment option for Registered Retirement Savings Plan (RRSP) holders to start collecting retirement income.
  • Life Annuities
    A life annuity provides you with the guarantee you’ll receive a series of income payments at fixed intervals for life. If you live past 82, you will still receive your payments as long as you live.
  • Term Certain Annuities
    A term-certain annuity provides guaranteed income payments for a fixed period of time. If the member passes away before the end of the term, their beneficiary or estate will continue to receive the regular payments. The beneficiary or estate may also receive the balance of the regular payments as a lump-sum.

Click here to learn more about Annuities and the different options from the Government of Canada website.

Check out our RRSP brochure for more information.