News Releases
- Registered savings plans allow Canadians to invest in a tax-efficient manner
- However, despite the many benefits of registered plans:
-- Less than 10 per cent of those eligible have an RDSP
-- Barely half of parents have opened an RESP for their children
TORONTO, ONTARIO--(Marketwire - May 27, 2011) - With the deadline to file tax returns now behind us, many Canadians may be wishing they had invested in a more tax-efficient manner and taken better advantage of tax-deferred plans and deductions. One way to accomplish this is by contributing to a registered savings plan such as a Registered Disability Savings Plan (RDSP), a Registered Education Savings Plan (RESP) or a Registered Retirement Savings Plan (RRSP).
"Despite the significant benefits and savings of registered plans, many Canadians lack knowledge about them," said David Sharone, Product Manager, Registered Plans and Solutions, BMO Financial Group. "Whether it be an RDSP, RESP or RRSP, registered plans are designed to provide financial security along with the advantages of tax-deferred investment growth and, in certain situations, the opportunity to receive government grants."
According to a study by BMO Financial Group:
- Almost half of Canadians have never heard of the Registered Disability Savings Plan.
- In fact, since its introduction in December 2008, less than 10 per cent of Canadians with a disability have taken advantage of the RDSP.
Similarly, adoption rates for the Registered Education Savings Plan (which allows parents and guardians to save for their child's post-secondary education) have been low:
- Less than half of Canadians have opened an RESP for their child.
- This is despite the fact that a strong majority of Canadians believe the cost of a post-secondary education is too expensive.
Is A Registered Plan Right For You?
"Canadians should be aware that not all registered plans are for everyone," added Mr. Sharone. "We advise Canadians to sit down with a financial advisor who can discuss the advantages of each plan and see which ones are best suited for them."
BMO offers the following information to help Canadians learn more about the different registered plans available to them:
| RDSP | RESP | RRSP | |||
| What is it? | A tax-deferred savings vehicle that provides long-term financial security for persons living with a disability. Includes government incentives such as the Canada Disability Savings Grant (CDSG) and Canada Disability Savings Bond (CDSB) that could add up to an additional $90,000 per individual. | A tax-deferred savings vehicle that helps fund a child's post-secondary education. Includes government incentives such as the Canada Education Savings Grant (CESG) and the Canada Learning Bond (CLB) that could add up to an additional $9,200 per child. | A tax-deferred savings vehicle that can help fund your retirement. Contributions are tax deductible- which means the individual's taxable income is reduced by the amount contributed. | ||
| Who is eligible? | Canadian residents under the age of 60 with a valid SIN who are eligible for the Disability Tax Credit. | Canadian residents of any age with a valid SIN can open an RESP for a child under the age of 18. | Canadian residents under the age of 71. | ||
| Contribution limit? | Up to $200,000 lifetime per individual. No annual contribution limit. | Up to $50,000 lifetime per child. No annual contribution limit. | The maximum RRSP contribution limit for 2011 is $22,450. Unused contribution room from previous years dating back to 1991 can be carried forward. The contribution limit for 2011 depends on the individual's RRSP deduction limit. This information can be found on the individual's 2010 Notice of Assessment. | ||
| Contribution deadlines? | Annual contribution deadline for Grants and Bonds: December 31. Last day for Grants and Bond eligibility: December 31 of the year the beneficiary turns 49 years of age. Last day contributions permitted to the plan: December 31 the year the beneficiary turns 59 years of age. | Annual contribution deadline for Grants and Bonds: December 31. Last day for Grants and Bond eligibility: December 31 of the year the beneficiary turns 17 years of age. Last day contributions permitted to the plan: depends on plan type. | Annual contribution deadline: The 60th day of the year following the tax year, usually March 1. Last day contributions permitted to an RRSP: December 31 of the year the individual turns 71 years of age. |
Amanda Robinson, Toronto
416-867-3996
amanda.robinson@bmo.com
Sarah Bensadoun, Montreal
514-877-8224
sarah.bensadoun@bmo.com
Laurie Grant, Vancouver
604-665-7596
laurie.grant@bmo.com