What is an RRSP?

An RRSP is a tax-deferred savings account that allows you to contribute pre-tax income, which reduces your taxable income for the year. The money you contribute to your RRSP grows tax-free until you withdraw it in retirement. This helps you save more by deferring taxes on your savings while benefiting from compound growth.

Key Features of an RRSP

• Tax-Deferred Growth: Your RRSP investments grow without being taxed until you withdraw them, allowing your money to compound faster.
• Immediate Tax Deduction: Contributions to your RRSP are deducted from your taxable income, reducing the amount of tax you pay in the year you contribute.
• Wide Range of Investment Options: You can hold various types of investments in your RRSP, including stocks, bonds, mutual funds, GICs, and ETFs, to diversify and maximize returns.
• Contribute Until Age 71: You can continue to contribute to your RRSP until the year you turn 71, giving you flexibility in building your retirement savings.
• Withdrawals in Retirement: When you retire, you can withdraw funds from your RRSP to support your retirement income needs. Withdrawals are taxed at your income rate at the time of withdrawal.

Why Contribute to an RRSP?

• Tax Savings: Contributing to an RRSP reduces your taxable income, potentially lowering your overall tax bill for the year.
• Tax-Deferred Growth: Your RRSP investments grow without being taxed until withdrawal, which can help your savings grow more quickly over time.
• Retirement Planning: An RRSP is specifically designed to help you build retirement savings and ensure you have a stable source of income during your retirement years.
• Flexibility: With a variety of investment options, you can choose how to invest based on your risk tolerance, time horizon, and financial goals.

How Much Can You Contribute to an RRSP?

The government sets an annual contribution limit based on a percentage of your income, up to a specified maximum. Any unused contribution room is carried forward, so you can make larger contributions in future years if you don’t maximize your limit in a given year.

RRSP Withdrawal Options

While RRSPs are intended for retirement savings, there are certain programs that allow you to access your RRSP funds early without penalty, including:

• Home Buyers' Plan (HBP): Allows you to withdraw up to $35,000 (per person) from your RRSP to buy or build your first home without immediate tax consequences.
• Lifelong Learning Plan (LLP): Lets you withdraw up to $10,000 per year (up to $20,000 in total) to finance full-time education for you or your spouse.

Benefits of Contributing to an RRSP

• Immediate Tax Relief: Your contributions are deducted from your taxable income, meaning you can reduce your tax bill for the year you contribute.
• Long-Term Growth: Investments inside your RRSP grow tax-free, which means you can build a larger nest egg for your retirement years.
• Retirement Income Security: RRSPs provide a stable source of income for your retirement, ensuring you have funds to support your lifestyle once you retire.
• Easy to Manage: You can choose how to invest your RRSP, monitor your progress, and make changes to your contributions as your financial situation evolves.

How to Open an RRSP

Opening an RRSP at Newfoundland and Labrador Bank is simple. Whether you are new to investing or experienced, our financial advisors can guide you through the process. Visit your nearest branch or apply online to start contributing to your RRSP. We offer a range of investment options to match your risk tolerance, time horizon, and retirement goals, ensuring your RRSP works for you.

Start building your retirement savings today with a **Registered Retirement Savings Plan (RRSP)** at Newfoundland and Labrador Bank. Maximize your tax savings and enjoy a secure retirement future!