When it’s not a good idea to make an RRSP contribution
If there is one financial planning message that has been drilled into Canadians it is this: “Be sure and try to maximize your RRSP contributions.”
As we draw nearer to tax time, Canadians will receive a high frequency of reminders to make their RRSP contributions. This is believed to be good advice for most. However there are cases where putting your savings into an RRSP isn't always the best idea.
As a first time home buyer, clients have the opportunity to withdraw funds from their RRSP to apply to their first purchase.
RRSP contributions are ultimately a tax deferral or sheltering tool. This article illustrates the situations in which making an RRSP contribution will not necessarily give these benefits. Will your salary be increasing in the upcoming years? Are you met with a high volume of expenses alongside your mortgage? Do you have a pension plan at work? If you fall into one of these categories, you will also be given other options to consider that may benefit you more, such as contributing to a Tax Free Savings Account (TFSA) or making the contribution to your RRSP and simply not claiming it in this year's tax return.