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Saving, Investment and Retirement Plans

Overview

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!

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

  • Age limit: You must be under the age of 71.
  • Tax filing: You file your income taxes with the Government of Canada.
  • Contribution room: Lesser of 18% of your annual earned income (subject to annual limits).
  • Example: If you make $45,000 this tax year, 18% is $8,100. This would be your maximum RRSP contribution for the year (subject to CRA limits).

Carry-forward

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

Withdrawals

One of the greatest benefits of the RRSP is that contributions may be deducted from taxable income (subject to CRA rules). When funds are withdrawn from the plan, they are subject to withholding tax. The tax is held back by the RRSP administrator and remitted on your behalf to the government.

Registered Education Savings Plans (RESP)

Education is one of the best gifts you can give your child, grandchild, or other loved one. Post-secondary education is vital to employability in today's economy, but it can also be costly. For a student living away from home, 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 beneficiary is ready for post-secondary education.

Other benefits of an RESP

  • Access to funds: You can access your contributions at any time (CESG amounts must be repaid).
  • Tax-sheltered growth: Investment income grows tax-sheltered.
  • Flexibility: Some plans allow transferring funds to an RRSP if the beneficiary doesn't pursue post-secondary education or to another beneficiary.
  • Reduced reliance on loans: Helps provide financial freedom to attend school with less debt.
  • Investment options: Access to a range of investment funds.
  • Contribution limit: Lifetime maximum of $50,000 per beneficiary.
  • Plan timeline: Funds must be retired by the end of the 35th year after the plan was started.

Canada Education Savings Grant (CESG) Program

Under CESG, the Government of Canada may 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.

CESG eligibility (general)

  • Age: Beneficiary must be under age 18.
  • Residency: Beneficiary must be a Canadian resident.
  • SIN: Beneficiary must have 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.

  • 40% CESG (example): Payment on the first $500 contributed where family net income is less than $42,708 (2012 figure).
  • 30% CESG (example): Payment on the first $500 contributed where family net income is between $42,708 and $85,414 (2012 figure).

Canada Learning Bond (CLB)

If your child was born after December 31, 2003, the Government of Canada may 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.

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)

  • Maturity guarantee: Segregated funds have a maturity date, upon which you are guaranteed 75% to 100% of your deposit (plan-dependent).
  • Death benefit guarantee: A guaranteed amount may be paid to your beneficiary tax-free if you die (plan-dependent).
  • Creditor protection: May provide creditor protection under certain conditions for individuals and businesses.
  • Avoid probate fees: Direct beneficiary payments may avoid probate fees on death (which can be as high as 6% of your investment in some cases).

Tax-Free Savings Account (TFSA)

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

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

  • Contributions: TFSA contributions are not tax-deductible.
  • Tax-free growth and withdrawals: Investment income and withdrawals are tax-sheltered.
  • Carry-forward room: Unused contribution room can be carried forward and used in future years.
  • Investment choice: Your investment fund choice can range from segregated investment funds to GICs and more.