Rrsp??????

Question

any interesting information?

Answer 1

Most people invest in an RRSP with the intent of using the tax deduction immediately. What people don’t realize is that they can make the RRSP contribution but save the deduction for a future year. Why would you want to do that? In case you’ll be in a higher tax bracket a year or two down the road. For example, you may be getting a big bonus that’s paid in the next year, or you may have received a severance allowance pushing your income higher. Why not just make the contribution at a later date? Because once the money is in the RRSP, you take advantage of tax-deferred investment growth.

In addition, you can use the $2,000 over-contribution to get ahead of the game and take advantage of tax-deferred growth and compounding in the RRSP. But as you get closer to retirement and withdrawals, make sure that you eventually claim the $2,000 as part of your deduction limit to avoid double taxation.