But spousal RRSPs give you an option
Q: In October, I will turn 69 years old and my wife turns 66 years old in July 2007. Every year, my wife and I have always contributed to our RRSPs, Although not always the maximum. I was informed I must withdraw my RRSPs this year. Will I qualify to contribute to an RRSP this year?
A: March 1 is the deadline for RRSP contributions that individuals are eligible to deduct on their 2006 tax return. Individuals may contribute to their Registered Retirement Savings Plan (RRSP) up to age 69 years young.
Your RRSPs must be collapsed on or before Dec. 31 in the year of your 69th birthday.
Although your final contribution to your RRSP is this year, you may contribute to a spousal RRSP. Provided you have the RRSP contribution room and your spouse continues to be under 70 years old, you can continue to benefit from the deduction.
On Dec. 31 of the year an individual turns 69, they must do either of the following:
- Withdraw the entire RRSP portfolio. This is not the best option, as the entire RRSP portfolio must be brought into income on your tax return.
- Rollover into a Registered Retirement Income Fund (RRIF). Many seniors choose this option. There are minimum amounts that must be withdrawn each year.
- Roll over into an annuity. Great for seniors that need a fixed steady income cash flow.
- A combination of the above.
Talk to your financial adviser before making any hasty decisions!
Henry Choo Chong, CGA provides accounting and tax services to individuals and businesses in the GTA. He can be reached at 416-590-1728, ext. 304. Any questions to Money Matters should be e-mailed to firstname.lastname@example.org