Saving, Investment and Retirement Plan

With the assistance of one of our advisors, CHSP Financial can help you meet your investment goals with a number of products including:

Registered Retirement Savings Plans (RRSP)
Registered Education Savings Plans (RESP)
Registered Income Funds (RIF), Life Income Funds (LIF), and Locked-In Retirement Accounts (LIRA)
Tax Free Savings Account (TFSA)

Rest easy knowing that your money is working for you!

1. REGISTERED RETIREMENT SAVINGS PLANS (RRSP)

RRSPs are a retirement savings vehicle created by the Canadian government. By making regular contributions into a tax-sheltered retirement portfolio (often a managed segregated fund) for 30-40 years, you can enjoy the benefits of compound growth.

ELIGIBILITY

You must be under the age of 71.
You file your income taxes with the Government of Canada
Contribution room: Lesser of 18% of your annual earned income.

Example: If you make $45,000 this tax year, you may contribute the lesser of $22,000 and ($45,000*18%). Because the latter amounts to $8,100, this is the maximum amount you can contribute in this tax year.

CARRY-FORWARD

If you do not contribute your maximum amount this year, this amount can be carried forward to next year and added to your current year contribution limit.

WITHDRAWALS

One of the greatest benefits of the RRSP is that all funds placed into the plan can be deducted from taxable income. Once funds are withdrawn from the plan, however, they are subject to a withholding tax. The tax amount will be held back by the RRSP administrator and remitted on your behalf to the government.

2. REGISTERED EDUCATION SAVINGS PLANS (RESP)

Education is the best gift you can give your child, grandchild, or other loved one. Post-secondary education has become vital to one’s employability in the current economy, but it can also be costly. For a student living away from home, the cost of each year of university can be upwards of $20,000!

RESPs are a great way to save for the education of your children, grandchildren, or anyone else you choose. The Canadian government allows RESPs to grow tax-free until the child (beneficiary) is ready for post-secondary education.

Other benefits include:

Ability to access your funds tax-free at all times (CESGs must be repaid).
Tax-sheltered investment income.
Many plans offer the option to transfer your funds to an RRSP if your beneficiary decides not to pursue post-secondary education or to another beneficiary.
Allows your child the financial freedom to attend school loan-free.
Access to a range of investment funds.
RESP-holders may contribute up to a lifetime maximum of $50,000 per beneficiary.
Funds must be retired by the end of the 35th year after the plan was first started.

CANADA EDUCATION SAVINGS GRANT (CESG) PROGRAM

Another benefit includes government grant eligibility under the Canada Education Savings Grant (CESG) Program. Under CESG, The Government of Canada will provide an extra 20% of your annual contribution up to $500 per year per beneficiary and up to a lifetime limit of $7,200 per beneficiary.

To qualify for CESG, a beneficiary must be a Canadian resident under the age of 18 with a social insurance number.

ADDITIONAL CESG

In 2005, the government updated CESG to encourage post-secondary education by increasing payments based on family net income.

Updates include:

40% CESG payment on first $500 contributed where family net income is less than $42,708 (2012)
30% CESG payment on first $500 contributed where family net income is between $42,708 and $85,414 (2012)

CANADA LEARNING BOND (CLB)

If your child was born after December 31, 2003, the Government of Canada will help kick start their education with $500 plus an extra $100 per year up until age 15. The bond does not require you to contribute your own money into the RESP.

3. SEGREGATED FUNDS

A differentiating factor between segregated funds and mutual funds is that segregated funds are only sold by insurance companies.

Key features and advantages of Segregated Funds (Seg. Fund)

Segregated funds have a maturity date, upon which you are guaranteed 75% to 100% of your deposit.
A guaranteed amount is also paid to your beneficiary if you die tax-free.
Segregated funds provide under certain conditions creditor protection for individuals and businesses.
Direct Beneficiary Payments avoid probate fees on death, which can be as high as 6% or your investment.

4. TAX-FREE SAVINGS ACCOUNT

As the most recent addition to Canadian investment vehicles, TFSAs were created in 2009 as a way for Canadians to accumulate savings and earn tax-free investment income. Residents of Canada (age 18 and older) with a valid SIN.

Key features and advantages of Tax-Free Saving Account (TFSA)

TFSA contributions are not tax-deductible.
Investment income and withdrawals are tax-sheltered.
Like RRSPs, unused contribution room can be carried forward and used in future years.
Type of investment fund is your choice, with options ranging from Segregated Investment Funds to Guaranteed Investment Certificates (GICs).