All right, you have one week left and you haven’t made your RRSP contribution for 2009 yet. You need to make your RRSP contribution before the deadline: March 1, 2010. So you have 6 business days left, not much time to do it. Chances are that your financial advisor’s agenda is already full ;-). So here’s a 2 minute guide to last minute RRSP contributions.
Before meeting with your financial advisor, get your paperwork in order. Check the following items before making your RRSP contributions:
- Your 2008 Notice of Assessment will tell you how much you can contribute (18% of your declared income minus any pension plan adjustment)
- Calculate if you are already on a systematic investment plan to contribute to your RRSP
- You are allowed to go $2,000 over your maximum RRSP contribution limit. However, since you won’t get a tax return for this extra 2K, don’t use it… it’s useless!
- Consider your marginal tax rate (you can use the Free RRSP tax return calculator in this article). This will help you determine your tax return according to your RRSP contribution.
When meeting with your financial advisor, he will obviously direct you towards one product or another. Here’s how it should be done if you want to make a good investment decision for your RRSP contribution:
#1 Revise your investor profile: You should complete or review an investor profile questionnaire. This is the very first step to determine which investment solutions are the best for you.
#2 Ask for at least 2 options: In order to be able to compare and understand what you are investing in, ask your financial advisor for 2 investment options for your RRSP. Ask him to compare both and to tell you which one he prefers and why. By looking at comparables, you will be in a better position to know what you are doing. Don’t forget to ask him if he gets a bigger monetary compensation for one product or another. Hint: he has to tell you so, if he tries to deviate from your questions, remind him that he has to provide you with a clear answer (he doesn’t have to tell you how much he makes, but he must declare if he is in a position with a conflict of interest).
#3 Don’t forget to talk about fees: It is one thing to do a last minute RRSP contribution, it’s another to get creamed by high management fees or redemption fees. Ask how much the product costs and why those fees are applied to the specific investment products. It is important to know if there is a fee to open the account, to make transactions (buying or selling) or if its management fees are based on a percentage of the amount invested.
#4 Ask for your RRSP contribution receipt: While you won’t receive your official RRSP contribution slip on the spot, ask for a copy of the document you have signed and when you can expect to receive your RRSP contribution receipt by mail. You must include it in your Tax declaration in order to receive your tax return.
#5 Don’t forget your HBP reimbursement: Making an RRSP contribution isn’t automatically applied to the reimbursement of your Home Buyer’s Plan. So if you must reimburse a part of your RRSP withdrawal this year, remember that this amount won’t generate a tax return. So if you are already calculating your tax return, review your calculation according to the amount reimbursed.
That’s it! You are set to make your RRSP contribution within the next 5 minutes ;-). However, if you can’t get a hold of your financial advisor for a good 45 minutes, you are better off making a temporary RRSP contribution (just to get your RRSP slip) and revise your investment strategy in March. Make sure to book a second appointment in March right away though!
If you have last minute RRSP questions, please comment below and I’ll answer them as fast as I can !
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