It's important to understand the details regarding RRSPs. The rules governing all RRSPs are set in the Federal Income Tax Act and are administered by Canada Revenue Agency. Below we have summarized the key aspects you should know.

Annual Contributions

You may contribute to your RRSP until December 31 of the year in which you reach age 71. The following limits and deadlines apply:

Maximum annual RRSP contribution limits

	Year	Contribution limit
	2007	$19,000
	2008	$20,000
	2009	$21,000
	2010	$22,000

Your allowable RRSP contribution for the current year is the lower of:

• 18% of your earned income from the previous year, or
• The maximum annual contribution limit for the taxation year, or
• The remaining limit after any company sponsored pension plan contributions.

Earned income includes salary or wages, alimony received, and rental income, among other income sources, but does not include items such as investment income.

You'll find the exact amount you can contribute to your RRSP for the current year on the Notice of Assessment you receive from Canada Revenue Agency after they process your previous year's tax return.

Company Pension Plan or Deferred Profit Sharing Plan - As a member of a company-sponsored registered pension plan or deferred profit sharing plan, the amount that you can contribute to your RRSP must be reduced by the total value of the pension credits you earned for the year.

This amount is referred to as a pension adjustment (PA) and it is reported on the T4 slip (Statement of Remuneration Paid) that you receive from your employer.

Annual Contribution Deadline - To be eligible for an RRSP deduction in a specific taxation year, you can make contributions anytime during the year, or up to 60 days into the following year.

Carry-forwards

If you can't make your maximum contribution one year, you can make up that portion of the contribution in later years by carrying it forward. The amount of your unused contribution limit is indicated on your federal Notice of Assessment, , which is sent to you once your income tax returns have been processed by the government.

You may also choose to delay claiming your current year's RRSP tax deduction. To take the deduction in a later year, however you must make sure that your allowable deduction limit has not been reached.

Over Contributing to your Plan

If you make an RRSP contribution beyond your maximum allowable amount for a year it is considered an over-contribution. There is a lifetime allowance of $2,000 for over-contributions. These contributions must be used before any new contributions are applied.

Transfers Between RRSPs

You may open as many RRSPs accounts as you wish. And you are free to transfer your RRSPs between financial institutions at any time without being subject to tax. (Some financial institutions may charge an administration fee for the transfer). You can also move some or all of your money between different investment options within your RRSP.

Home Buyer's Plan

The Home Buyer's Plan allows you to withdraw funds from your RRSP to purchase your first home. Here are some of the key facts:

• You and your spouse can each withdraw up to $20,000 from your respective RRSP plans.
• The funds must have been deposited into an RRSP for a minimum of 90 days before you are eligible to withdraw from your plan.
• You are required to repay at least 1/15 of the funds each year, beginning two years after the funds were withdrawn.
• A signed agreement to buy or build a qualifying home is required.
• You must not have owned a home for at least 5 years in order to be eligible to withdraw from your RRSP.

For details see Canada Revenue Agency.

Lifelong Learning Plan

The Lifelong Learning Plan allows you to borrow funds from your RRSP to pay for training or education. Here are some of the key facts:

• You can withdraw up to $10,000 per calendar year to finance full-time training or post-secondary education.
• The total amount that you are eligible to withdraw from your RRSP is $20,000 over a maximum of four consecutive years.
• The funds can be applied to your education or your spouse’s education. Children are not eligible for the Lifelong Learning Plan.
• There are disability options and if you or your spouse meet the disability requirements, then you or your spouse are entitled to taking your training/education be on a part-time basis.
• The amounts of funds withdrawn from your RRPS are not subject to taxes upon withdrawal.
• You are required to repay a minimum of 10% of the amount borrowed from your RRSP over a maximum period of 10 years.

For details see Canada Revenue Agency.

Withholding Taxes

The government requirement are that any funds withdrawn from an RRSP will be  subject to withholding taxes. This amount must be held back by the plan administrator and remitted to the government on your behalf.

Effective January 1, 2005, the following withholding tax rates apply:

	Amount of RRSP Withdrawal	All Provinces Except Quebec	Quebec
	Up to and including $5,000	10%	21%
	$5,001 to $15,000	20%	26%
	More than $15,000	30%	31%

When you withdraw from your RRSP, you will receive a T4 RRSP receipt for the total amount of the withdrawal at the end of the year. This amount is considered as income and will be included as such in the year it was withdrawn from your RRSP. In addition, the withholding tax that you had paid at the time of your withdrawal is counted as taxes paid when you file your returns.

Separation or Divorce

In a situation of separation or divorce, either you or your spouse can transfer funds from an existing RRSPs to the other, without being subject to tax, provided that:

• You and your spouse are living apart when property and assets are settled; and
• There is a written separation agreement or a court order.

Death of a Plan Holder

In the event of death, the proceeds of your RRSP are distributed to whoever was named as your beneficiary on the plan. If no beneficiary has been designated on the RRSP, then the funds will be transferred to your estate. This designation can be specified in either your RRSP or in your will. Quebec residents must make the designation by will or marriage contract for most plans.

The proceeds of the RRSP will remain tax-sheltered if one of these situations applies:

• Your surviving spouse is the beneficiary, and the proceeds are transferred into an RRSP or a Registered Retirement Income Fund (RRIF) in his/her name;
• You have no surviving spouse, but you have children or grandchildren who are minors named as your beneficiaries. They are dependent on your estate for financial support and will have the proceeds transferred to a term annuity registered in their names; or
• Children or grandchildren, regardless of age, who are financially dependent because of physical or mental infirmity. The RRSP proceeds will be transferred to an RRSP or RRIF registered in their names, or used to purchase an annuity.

In all other situations, the balance of the RRSP at the date of death is considered as income on the plan holder's final tax return.

For further information on RRSPs contact our investment representatives at 1-800-769-2511 or view the documentation made available online by Canada Revenue Agency.