Here are a few basic but important RRSP Reminders for the Season:
– The deadline for contributions to be applied against the 2008 tax year is March 2, 2009.
– The maximum RRSP contribution limit for 2008 is $20,000.
– Clients who reached 71 years of age in 2008 must convert their RRSPs into a retirement income vehicle before the end of 2009 to avoid being taxed at fair market value on their RRSPs.
– Investors can exceed their personal contribution limit by up to $2,000 without being subject to a penalty tax. (It is very important to be aware of this. If you exceed your allowable RRSP limit by more than the $2,000 allowable overcontribution limit you face a 1% monthly interest penalty. For example, if you overcontribute by $5,000 you face a penalty of $30 per month. This adds up quickly. Check your Notice of Assessment very carefully.)