MOOSE JAW — The March 3 deadline to contribute to a Registered Retirement Savings Plan (RRSP) for the 2024 tax year has now passed, but tax filers still have options to maximize their savings this year.
Crystal Fowler, financial services manager at Conexus Credit Union in Moose Jaw, said Canadians can still take proactive steps for future tax planning.
“A common misconception is that you can only make an RRSP contribution during tax time, which is not true,” Fowler explained. “We can set up payment streams all year for an RRSP.”
RRSP contributions and tax benefits
Although contributions made after March 3 will not count toward 2024 income taxes, they can still be applied in 2025. Fowler recommends a strategy of making regular contributions throughout the year, rather than waiting until the last minute.
“You can set up a pre-authorized contribution monthly or biweekly so you’re saving all year,” she said. “That way, you don’t have to find those extra funds at tax time.”
If you missed the deadline but still hope to find other ways to reduce taxes owing, Fowler suggests exploring different registered savings options.
“The contribution limit for your Tax Free Savings Account (TFSA) for 2025 is $7,000,” she said. TFSAs allow savings to grow tax-free, and unlike RRSPs, withdrawals are not subject to taxation.
Fowler stressed that RRSP contributions can be beneficial in lowering tax liabilities, especially for those in higher income brackets. “Contributions are used to reduce the taxes owing,” she said. “The amount that’s payable to the government is (thereby) reduced.”
If you’re unsure how much to contribute, check your RRSP limit with the Canada Revenue Agency (CRA). Over-contributions can result in penalties, typically one per cent per month on the excess amount.
When and how to withdraw from an RRSP
While RRSPs are designed for retirement savings, these funds can be accessed earlier in certain situations, such as purchasing a first home or furthering your education.
“The amount you could take from your RRSP to buy your first home is up to $35,000, but you need to know that you must repay those withdrawals within a 15-year period,” she said.
Similarly, the Lifelong Learning Plan (LLP) allows individuals to withdraw up to $10,000 per year, up to a maximum of $20,000 for education. These funds must be repaid within 10 years to avoid tax implications.
If withdrawing for other reasons, Fowler said your financial institution will deduct taxes before any funds are received. “A common misconception is that people forget they got a tax deduction when they filed their income tax,” she said. “The financial institution will hold back a penalty and apply it to the government before they get their funds.”
RRSPs must be converted into a Registered Retirement Income Fund (RRIF) by the end of the year an individual turns 71. At that time, you must start withdrawing a minimum amount either monthly, quarterly, semi-annually, or annually. At age 72, the minimum withdrawal percentage is 5.40 per cent of the RRIF balance as of January 1 that year.
Unlike an RRSP, where funds grow tax-deferred, an RRIF is designed to provide a steady stream of income during retirement.
Other retirement savings options
While RRSPs are a powerful financial tool, they’re not the only option for saving. Fowler encourages individuals to explore TFSAs and the First Home Savings Account (FHSA), which can benefit first-time homebuyers. Another option is the Registered Education Savings Plan (RESP).
To maximize your savings this tax season, Fowler advised checking with your employer about their retirement savings options. “Some employers have RRSP matching programs,” she noted.
The importance of personalized planning
Fowler encourages individuals to take a proactive approach to financial planning by seeking professional advice that’s specific to their circumstances.
“I would really stress that everyone’s situation is unique, so they really need to talk to a financial advisor or come into the branch so we can give that personalized advice based on their personal situation,” she said.
For further information, contact the Conexus Credit Union Member Contact Centre during regular business hours at 1-800-667-7477.
The Conexus Credit Union is located at 80 High Street West and can be reached at 306-690-1449.
