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TWO CENTS WORTH FINANCIAL PLANNING NEWSLETTER
ISSN 1488-397X      FEB. 23, 2001
BY DOUG HUDSON, MBA,CD
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In this Issue - LAST MINUTE RRSP FACTS AND RULES

Key Information

This is the last week of RRSP season and for those of you who have been waiting for the market 
to drop even more before investing in your RRSP, there is not much time left to make your 
contribution for last year. Here is some key information that you should find useful.

The very best place to look for the rules regarding RRSP's is Revenue Canada Guide "RRSP's 
and Other Registered Plans for Retirement - 2000" (126 kb .pdf file). You can download this here:
http://www.rrsp.org/t4040.htm

Contribution Deadline: This is always sixty days into the new year. Except in a leap year, it is 
always March 1st.

Maximum RRSP Contribution Limit: $13,500 or 18% of previous year's earned income. This is 
reached when your earned income is $75,000 or more. You may have additional carry-forward 
amounts. This would be indicated on your last federal income tax "Notice of Assessment".

Spousal RRSP's: You may contribute to your own RRSP or that of your spouse's up to your 
allowable contribution limit. For more information on spousal RRSP's go here:
http://www.rrsp.org/tcw021101.txt

Age Limits: You can contribute to an RRSP from the ages 18-69, provided you have the 
contribution room. After age 69 you may contribute to the RRSP of a younger spouse.

Home Buyer's Plan Repayments: If you have a Home Buyer's Plan repayment to make the 
minimum amount is 1/15 of the amount removed from your RRSP. For those who removed the 
maximum amount this is $1,333.34.

RRSP Loans: Don't wait for the last minute to apply for an RRSP loan. These can sometimes 
take 3 days to process. If there is a problem with the paperwork you may miss the deadline. Have 
your proof of employment with you and a void cheque when you apply for the loan. 

Does it make Sense to Borrow: Let us assume that you are in the 50% marginal tax bracket. If you 
borrow $1,000 the government will give you back $500. Your cost is likely to be prime or prime 
plus 1%. Let's assume that it is 7% for this example. Over a one year period your monthly 
payments would be $86.53. The total cost to borrow is $38.36 ($86.53 x 12 - $1,000 = $38.36). If 
you are 30 years old and plan to retire at age 65 that $1,000 will grow to $28,102 at 10%. By age 
70, when you have to start taking money out in a RRIF it will be $45,230. So let's add this up. 
You paid $1,000 but the government gave you back $500 so your net cost is $500. Add to this 
$38.36 for a total of $538.36. A this is likely to get you $45,230 at RRIF age. It seems to me that it 
makes sense to borrow.

Tax Receipts: Most institutions make two receipts. One for the first 60 days of the year and one 
for the remaining 305 days of the year. You should have already received your receipts for 
contributions made in the last 305 days of 2000. Give your institution a couple of weeks to get 
your receipt to you for the first 60 days of 2001. Note that these receipts may be used for last year 
or the current year. 

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ADVERTISORS: To advertise in this newsletter or at http://www.rrsp.org/ 
contact Doug Hudson here: doughudson@rrsp.org
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DISCLAIMER: Nothing in this newsletter should be misconstrued as an offer to sell mutual
funds.  Mutual funds and other investments should be purchased through a qualified 
represenative in your provice, licensed to sell these securities, and only after you have
read the prospectus.  Note that past performance is no guarantee of future performance.