How to Optimize your RRSP

With the RRSP deadline quickly approaching, did you know that you could potentially increase your RRSP contribution without having to dig deeper into your pockets?

By combining your existing RRSP contribution with an RRSP loan, you can increase the total RRSP deposit and use your refund to pay off the loan.

Optimization Calculation:

You can determine the optimal amount to borrow so that your tax refund is approximately the same as your loan amount by using the following formula:

*Original RRSP Deposit: Refers to the total amount that you plan on contributing to your RRSP for a specific tax year, not including an RRSP loan.

Case study:

Assume you have been contributing $500 every month to your RRSP, for a total of $6,000 over a 12 month period. If your marginal tax rate is 35%, the optimization calculation would be:

Optimized RRSP contribution:

RRSP Deposit: $6,000

RRSP Loan: $3,230

RRSP Refund: $3,230 (pays off loan)

Approximate loan interest payable (based on one month of interest at 3.5%): $9.42. Total RRSP contribution: $9,230

Advisor & Co has made arrangements with BMO and B2B Bank to provide you with RRSP loans at competitive rates. Speak to one of our team members today and learn if an RRSP loan is right for you, and how an Advisor & Co. RRSP can be incorporated into your personalized financial plan.

Advisor & Co Financial Solutions for Life

RRSP LOANS AVAILABLE

PH: (306) 292-3734 Toll Free: 1-877-888-9403