Double-Up RRSP Tax Planning Technique, Half 1

Why: I’m a very long time widower in excellent well being and nonetheless working towards my career at nearly 72 years of age. I make over $200,000 a yr, however I intend to retire on the finish of 2023 and begin taking it straightforward. As a result of I turned 71 in January this yr, I needed to convert my RRSP to RRIF. Then, I acquired my 2021 evaluation discover saying that I can contribute $29,210 to my RRSP for this yr, however I not have an RRSP. Is it nonetheless doable to save lots of these tax {dollars} or is it too late for me?

a: I am again with excellent news with my Double-Up RRSP Tax Planning Technique. However first, a refresher on RRSP contributions and RRIF conversion.

Registered Retirement Financial savings Plans are a really useful gizmo to save lots of in your retirement. In addition they present tax-deferred advantages as a result of for each greenback you contribute to your RRSP, you deduct that greenback out of your revenue, which in flip lowers the revenue tax you owe that yr — particularly Helpful for high-income individuals such as you.

Anybody with earned revenue is eligible to contribute to their RRSP the next yr. The contribution room is calculated at 18 % of earned revenue, as much as a most of $29,210 for 2022; Your particular restrict is indicated in your discover of evaluation from the Canada Income Company (CRA). The contribution cell is adjusted downward by the pension quantity (PA) if you happen to contributed to a registered pension plan (RPP) in that tax yr; Nevertheless, if you have not maxed out earlier years’ RRSP contributions, these quantities can be carried ahead and added to your restrict for the present yr.

All RRSPs have to be transformed to a Registered Retirement Revenue Fund (RRIF) (or an annuity) by the top of the calendar yr through which you flip 71. Within the subsequent tax yr, you will have to withdraw a minimal quantity out of your RRIF. , to supply a supply of revenue in your retirement. This quantity is taxable within the yr as if you happen to earned that revenue from the job.

You do not want to transform your RRSP to RRIF Day You flip 71 (which is early 2022 in your case). Actually, you may have till the top of the yr through which you flip 71 to finish the conversion. (People whose partner is youthful can contribute to an RRSP for his or her partner whether or not or not she or he turns 71.)

Though you already transformed your RRSP to a RRIF firstly of the yr, it lets you open a brand new RRSP earlier than the top of the yr and contribute as much as the restrict indicated in your discover of evaluation, in your case, $29,210. doesn’t stop from This can mean you can deduct $29,210 out of your taxable revenue and eradicate taxes due on this quantity this yr.

You may nonetheless must convert this new RRSP to your present RRIF earlier than the top of 2022 (this yr’s deadline is Friday, December 30). You’re allowed to do that instantly after making your RRSP contribution, however this two-step course of will take a while, so do not delay till late 2022.

The power to nonetheless contribute to an RRSP for 2022 and obtain tax financial savings for this yr if you file your 2022 tax return is nice information at first – however it will get even higher!

my subsequent cash for all times The column will supply the second a part of my Double-Up RRSP technique with the intention to nonetheless get further tax advantages after you might be required to transform your RRSP to a RRIF.

Within the meantime, begin implementing the primary a part of my Double-Up Technique immediately – 2022 ends quickly!

Thi is wealth advisor at Convery, RFP, CFP, CIM, FMA, FCSI, Dundas, and she or he has a number of extra years to transform her RRSP to RRIF. His column seems bi-weekly in Hamilton Spectators, It invitations your questions at or by visiting

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