As we approach tax time a very important deadline comes up on Friday. If you are looking to contribute to your Registered Retirement Savings Plan for the 2018 tax year, the deadline to do so is on March 1st. RRSP's are not talked about as much as they were years ago but there is still a benefit to them.
"When you put in money into RRSP's this year, it reduces your taxable income, so you're paying less income tax in the year you contribute," according to Lydia Nastiuk from H & R Block in Drumheller.
There is a significant reduction in taxable income when you contribute according to Nastiuk. "It works out to about for every 3000 you put in, you'd get about 1000 back on your income tax so that's usually the average that it kind of works out to."
The true benefit is seen when you are ready to retire. "When you're young and you are working and you have a high income and you're in a higher tax bracket, you're actually saving. You can even get yourself down into a lower tax bracket by contributing to RRSP's. Then when you get older and take that money out of the RRSP's, you're in a lower tax bracket so you're pulling it out at a lower tax rate than what you saved when you put it in," explains Nastiuk.
There is a multitude of accounts you can invest in with your RRSP. To get the benefit for your 2018 taxes, you only have until Friday, March 1.