{"id":215771,"date":"2025-10-15T21:56:07","date_gmt":"2025-10-15T21:56:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/215771\/"},"modified":"2025-10-15T21:56:07","modified_gmt":"2025-10-15T21:56:07","slug":"consider-these-year-end-strategies-for-your-rrsp","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/215771\/","title":{"rendered":"Consider these year-end strategies for your RRSP"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

My neighbour, Jack, makes me laugh. He just reached age 71 and was telling me this week how old he feels. \u201cTim, when I was young, I used to make a lot of noise having fun. Now, I make a lot of noise just bending over. And then there\u2019s my memory. Today, getting lucky consists of walking into a room and remembering why I\u2019m there.\u201d<\/p>\n

Our conversation turned to retirement<\/a>, then retirement savings. Here are the highlights of some of the year-end tips for registered retirement savings plans (RRSPs) that I shared with Jack.<\/p>\n

Make withdrawals in a low-income year. While it\u2019s always best to leave your RRSP assets untouched before retirement to allow for maximum growth, there may be times when you simply have to withdraw funds. If 2025 is a low-income year for you and an RRSP withdrawal is imminent, consider a withdrawal before year end to pay less tax than you might next year if your income is likely to be higher in 2026.<\/p>\n

Maximize contribution room for next year. If you have the ability to control the level of your income \u2013 perhaps because you\u2019re self-employed and pay yourself from a corporation, consider maximizing your RRSP contribution room<\/a> for 2026 if you can. The maximum RRSP contribution room for 2026 will be $33,810, which you will be entitled to if your earned income in 2025 is $187,833 or more.<\/p>\n

Can Warren, 62, retire in two years while maximizing his RRSP and TFSA?<\/a><\/p>\n

Contribute to a spousal RRSP. If you expect to have a higher income in retirement than your spouse, consider contributing to a spousal RRSP. You can claim the deduction and your spouse can pay the tax on withdrawals later. You\u2019ll face the tax on withdrawals to the extent you\u2019ve contributed to the spousal plan in the year of a withdrawal, or the two previous years. If you contribute by Dec. 31, your spouse can make a withdrawal as early as Jan. 1, 2028, without attribution back to you. If you wait until the new year to contribute, the earliest withdrawal date becomes Jan. 1, 2029. <\/p>\n

Make a final contribution before year end. If you turn 71 in 2025, your RRSP is maturing at the end of this year and you\u2019ll have to transfer the assets to a RRIF (the most common option), or purchase an annuity, to avoid paying tax on your plan. Don\u2019t forget to make one final contribution to your RRSP by Dec. 31 if you have contribution room. You won\u2019t be able to make this contribution in early 2026 since your RRSP will no longer exist.<\/p>\n

Make an advance contribution. If you turn 71 this year you can make an overcontribution to your RRSP in December. Why bother? Well, if you have earned income this year it will provide you with RRSP contribution room effective Jan. 1, 2026, even though you won\u2019t have an RRSP next year. So, make your 2026 contribution in December before you wind up your plan. You\u2019ll face a 1-per-cent penalty on the overcontribution for the month of December. In 2026, you\u2019ll be entitled to claim a deduction for the overcontribution. The tax savings will far outweigh the one-month penalty. Be sure to file Form T1-OVP to calculate and pay the penalty to the Canada Revenue Agency.<\/p>\n

Why you should tell your kids how much inheritance they\u2019ll get<\/a><\/p>\n

Make HBP withdrawals by year end. If you plan to make an RRSP withdrawal under the Home Buyers\u2019 Plan (HBP) to help with a home purchase, it normally makes sense this late in the year to wait until January to withdraw funds since you\u2019ve got to make a purchase by Oct. 1 of the year after the year of withdrawal. By waiting until January, you can gain more time to purchase a home (you\u2019ll have until Oct. 1, 2027). Yet, under a temporary measure, if you make a first withdrawal under the HBP before Dec. 31, 2025, you\u2019ll have an additional three years (for a total of five years) before you have to start making repayments (over 15 years) to your RRSP. So, a withdrawal in 2025 will give rise to repayments starting in 2030. If you wait until 2026 to make a withdrawal, your repayments will start in 2028. <\/p>\n

Time your HBP repayments appropriately. If your repayments under the HBP have begun, don\u2019t forget to make your 2025 payment by March 2, 2026, (the RRSP deadline for 2025 contributions) to avoid paying tax on a missed repayment. On the other hand, if your income is very low and cash is tight this year, you might opt to pay tax on the missed repayment. Or, if the HBP funds were withdrawn from a spousal RRSP, and your spouse is in a low tax bracket, you might opt to have your spouse pay the tax on a missed HBP repayment (as an aside, the spousal RRSP attribution rules don\u2019t apply to HBP withdrawals).<\/p>\n

Tim Cestnick, FCPA, FCA, CPA(IL), CFP, TEP, is an author, and co-founder and CEO of Our Family Office Inc. He can be reached at tim@ourfamilyoffice.ca<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: My neighbour, Jack, makes me laugh. He just reached age 71 and was…\n","protected":false},"author":2,"featured_media":69218,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[901,888,902,879,877,903,45,49,48,876,895,896,891,878,875,46,549,295,894,133,887,914,880,881,893,889,890,884,904,885,909,910,912,907,911,905,908,131,132,882,898,899,714,897,906,865,61,900,892,886,883,913],"class_list":["post-215771","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-alberta","tag-arts-news","tag-bc","tag-breaking-news","tag-breaking-news-video","tag-british-columbia","tag-business","tag-ca","tag-canada","tag-canada-news","tag-canada-sports","tag-canada-sports-news","tag-canada-trafficcanada-weather","tag-canadian-breaking-news","tag-canadian-news","tag-economy","tag-education","tag-environment","tag-federal-government","tag-finance","tag-foreign-news","tag-globe-and-mail","tag-globe-and-mail-breaking-news","tag-globe-and-mail-canada-news","tag-government","tag-life-news","tag-lifestyle","tag-local-news","tag-manitoba","tag-national-news","tag-new-brunswick","tag-newfoundland-and-labrador","tag-northwest-territories","tag-nova-scotia","tag-nunavut","tag-ontario","tag-pei","tag-personal-finance","tag-personalfinance","tag-photos","tag-political-news","tag-political-opinion","tag-politics","tag-politics-news","tag-quebec","tag-sports-news","tag-technology","tag-travel","tag-trudeau","tag-us-news","tag-world-news","tag-yukon"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/215771","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=215771"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/215771\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/69218"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=215771"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=215771"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=215771"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}