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A14 -The Canadien Champion, Tuesdav, rebrua 7. 2006 44 'J' dimV goà1UJÈ M* ~Ta1k RRSP Special Report: Facts about your RRSP Onc~,e uyuuu il i s xi<o season. The rime where we ail scrambie to make last year's RRSP contributions ta get the tax deduction. * However making RRSP contributions is flot just about reducing taxation, it is about pion- ning for a dream. Thot dream is financiai independience. One day you may want to take it easy, enjoy life. This does flot mean you have ta quit working, but it wiii mean, geffing out of the rat race and doing the * things you have been putling off - taking up a hobby, traveling the world, spending more lime with chiidren and grandchildren or just spending more time at the cottage. The RRSP is one vehicle that con heip you save money in a fax effective manner ta live your dream. When iooking at conhibuting fa an RRSP, it's important ta understand the detaiis regarding RRSPs.The rules governingal RRSPs are set out in the Federal Income Tax Acf and are administered by Canada Revenue Agency. Below we have tried ta surnmarize some of the key aspects you should know about RRSPs. Annua Contdbubons RRSP Contribution Maximum - The maxý currenr year is the lower of: *18% Of YOur eamned income tram thre previaus year or , The maximum annual contribution limit for the taxation year or * The remnaining limif affer any company SPOnsored pension plan contributions. Earned income includes saiary or wages, aiimony received, and rentai income, among other income sources, but does not include items such as investment income. You con flnd the exact amount you con cantribute ta your RRSP for the current year on the Notice of Assessment you receive tram Canada Revenue Agency arffer they process your previaus yeaes tas return. Company Pension Plan or Deferred Profft Sharlng Plan As a member of a company-sponsored registered pension plan or deferred profit shahng plan, the amount that you con con- tribute ta your RRSP must be reduced by the total value of the pension credits you earned for the year. This amount is reterred ta as a pension adjusfrnent (PA) and it is reported on the T4 slip (Statement of Remuneratfion Paid) tiat you receive from your employer. butions anytime during the year or up ta 60 days into the fallowing year. Carry-forwards If you can't make your maximum contri- bution one yeac, you con make up that por- tion of the contribution in later years by cor- rying it forward. The amount af your unused contribution limit is shown on your federa Notice of Assessment. You may also choose ta delay claiming your current yeat s RRSP tas deduction. To take the deduction in a later yeor you must make sure that your allowable deduction limit has not been reached. You may even consider taking a loan ta bning your RRSP contributions up ta date depending on your tas situation for 2005. Over Contributlng to your Plan If you make an RRSP contribution beyond your maximum liIowable amount for a year it is considered an over-contribuion There is a liftlme allowance of $2,000 for over-con- tribulions. These contribuions must bu used before any new contributions are applied. miuni onnuai conribution limir is currenlly The Home Buyers Plan allows you ta bar- $16.500. t is scheduled ta, increas ta $18,000 Annual Contribution Deaciln row tunds tram your RRSP ta purchase your in 2006, and $19,000) in 2007. To bu eligible for an RRSP deducion in a first home. Here are some of the key tacts: 'four allowablge RRSP contribution for the specfic taxation yeat you con make conti- - 'fou and your spouse con each borrow Lous .e Prime up ta $20.000. e The funds must have been on deposit at least 90 days before you withdrew them. * At ieast 1/15 of the funds must be repaid each year, beginning two yeors affer the funds were withdrawn. - A signed agreement ta buy or buiid a quaitying home is required. Lifelong Leaming Plan The Litelang Learning Plan allows you ta pay for training or education with RRSP funds. Here are some of 1h. key tacts: *You con withdraw up ta $ 1 0,OO per cal- endar year ta finance fuli-time training or post-secondary education. " The student con bu you or your spouse, but not your children. " If the student meets disability require- ments, then the training/education con bu on a part-lime basis. - The total amount that con bu witti- drawn is $20,IXU with withdrawals over a maximum of four consecutve years. * Amounts that are withdrawn are not subject ta taxes on withdrawa. - At least 10% af the amount borrowed must bu repala each year, over a maximum period of 10 years, Separalon or Divorce During separa- flan or divorce, either you or your spouse con trans- fer existing RRSPs ta the other, with- out buing subject ta tas, provided that: 9 You are living apart when prop- erty and assets *You have o wnitten separation agreement or a court order. Decrlh of a Plan Hoider In the event of S death, the pro- ove P C» of ceeds of your 4AgiorY0(4. RRSP aire distrib- uted ta whoever - was named as your beneiciary -, or ta your estate, if n eneficiary - has been desig- nated This desig- nation con be -- specified in eiter Uçj' wLW 4a your RRSP or in ynur wil. Quebec residents must make the desig- nation by wii or $marriage con- tract for most plans. The pro- writproessinal ceeds of the RRSP wii remain tas- f values sheltered if one of Sptated. these situations pay applies: Your survrving - - -- spouse is the bun- -eficiary, and the Home Buvees Pk