What is an RRSP?
An RRSP is a Registered Retirement Savings Plan, registered with the Canada Revenue Agency (CRA), that allows you to claim contributions to it, within specified limits, as a deduction from current taxable earned income. In addition, income earned within the plan is not subject to tax. An RRSP, therefore, not only offers a profitable way to save for retirement, but also provides you with an effective way of reducing your current taxes!
What is a Group RRSP?
A Group RRSP is a collection of individual RRSPs grouped for ease of management and administration. The PWI Group RRSP has lower investment management charges, which allows your money to work harder for you!
Who can participate?
Anyone with earned income and his/her spouse are eligible to participate.
What types of contributions can be made to the PWI Group RRSP?
* Monthly contributions by payroll deduction.
* Contributions by a pre-authorized cheque plan.
* Lump sum contributions.
* Transfers from other RRSP’s or other registered plans.
What is the maximum yearly contribution limit?
If you are not a member of a Registered Pension Plan or a Deferred Profit Sharing Plan, you may contribute the lesser of 18% of earned income, or $20,000. This calculation is based upon earnings in the immediately preceding year; for example, 2008 RRSP contributions will be based on 2007 earned income.
When can I contribute?
You can contribute on a regular monthly (or other) basis by pre-authorized cheque, or you may make lump sum contributions throughout the year, over and above, or in lieu of, regular contributions. Contributions made (regular or lump sum) during the first 60 days of any year are tax deductible for the previous year, or for the year in which they were made – your choice!
Does the PWI Group RRSP allow me to open and contribute to a plan for my spouse?
Yes. The PWI Group RRSP allows you to set up two plans – a plan in the name of your spouse and a plan in your own name. (Your spouse need not be employed for you to contribute to a spousal RRSP.)
A contribution made by you to a spousal RRSP does not affect your spouse’s RRSP contribution limit for the year, but must be included in your own contribution limit.
Why contribute to a spousal RRSP?
The primary reason for establishing a spousal RRSP is to allow for “income splitting” in the future. This can occur because assets in a spousal RRSP are considered to be the property of the spouse. Since withdrawals (with some restrictions) are taxed in the hands of the spouse, they will be taxed at the spouse’s tax rate. This is why it is most advantageous to set up a spousal RRSP when the spouse has little or no retirement income.
Who will manage my RRSP contributions?
We have selected Great-West Life, whose total worldwide assets under administration exceed $5 billion.
Your personal account information is available to you alone, by phone (toll-free) or, via the Internet.
How will my money be invested?
Investing in the PWI Group RRSP is simple. You can pick 1 of our 5 “Continuum” funds, based on your “investment risk tolerance”; or, choose the fund makeup for your contributions. The decision is yours!
On the other hand, you may wish to do your own investing and choose from a wide variety of investment options with respected fund managers. (To determine your investment risk tolerance, you simply complete a 16-question investment personality questionnaire – Step 3 in “Your planning guide”.)
How can this unique Group RRSP benefit you?
There are no front-end sales charges – you do not have to pay a commission when you purchase your investment fund units, an amount which in other plans can reach up to 7% of your purchase price.
There are no deferred sales charges – you do not have to pay a charge when redeeming your fund units. This cost could amount to 6% with other plans, if you redeem your fund units prematurely.
No minimum investment is required.
There is no charge for transfers within the PWI Group RRSP.
Can I terminate or transfer my RRSP?
Your RRSP is fully portable and can be terminated or transferred at any time. Your RRSP must mature no later than the end of the year in which you attain age 71. Continued tax deferral can be obtained by transferring your RRSP assets to a Registered Retirement Income Fund (RRIF) or by purchasing an annuity, once your plan has matured. At the time of your retirement, PWI Insurance Services will also provide competitive quotations for life annuities and RRIF’s.
Can I withdraw part of the proceeds from my RRSP?
Partial withdrawals may be processed without terminating your Plan; however, as with any RRSP, amounts withdrawn will become subject to withholding tax. The CRA’s withholding tax rate is based on the amount withdrawn, as follows:
|Less than or equal to $5,000||
|Greater than $5,000 but less than or equal to $15,000||
|Greater than $15,000||
Is there a penalty for withdrawing my funds?
Guaranteed Investment Account (GIA) funds are withdrawn upon death, at book value. If they are withdrawn at any other time, market value will apply. GIA transfers to other investment options within the policy will be paid out at the lesser of book and market value.
A $35.00 withdrawal fee will apply on all withdrawals from the policy (this applies to GIA’s and market-based funds).
What statements and tax receipts will I receive as a member?
You will receive semi-annual statements which will provide you with the value of your RRSP as well as the total amount of contributions made during the statement period. These statements will be issued in January and July, each year.
You will also receive two receipts to file with your Income Tax return – one for contributions received during the period March 1 to December 31, and one for contributions received during the period January 1 to February 28.
How do I sign up?
Simply complete an ‘Application for membership in a retirement savings plan’ form, and, if applicable, the Continuum Fund tear-off, and return them to PWI Insurance Services. Contact PWI Insurance Services for the forms.
Please give us a call. We are here to help!