Lower your tax bill with RRSP contributions

Every year in January and February, there’s an “RRSP season” scramble as people across the country rush to get money into Registered Retirement Savings Plans (RRSPs) in time for their contributions to count as deductions against last year’s income. It’s something of a Canadian tradition.

But what if you don’t have enough to maximize your contribution this year? Should you consider an RRSP loan, which lets you borrow to contribute?

How an RRSP Loan can help

Prospera’s RRSP loans let you borrow up to $50,000 with terms of up to five years. Also, you don’t have to make any payments for up to 90 days, so there’s time for that tax refund to come in.

Is an RRSP Loan right for you?

Answering these questions will help you make the best decision:

How much RRSP contribution room do you have available? (Find the magic number on your latest Notice of Assessment.)
Were you in a relatively high tax bracket in 2022, so you can get the most benefit from the tax deduction that comes with an RRSP contribution?

Will you use your tax refund to pay off the loan, so you pay the least amount of interest possible?
Can you earn a higher rate of return on the investments within your RRSP than the rate of interest on your RRSP loan?
What other debt do you have, and can you afford to take on more loan payments?

RRSP loan strategies

Many people use RRSP loans in one of these two ways:

Top up a contribution with a relatively small loan and pay off most or all the balance when the tax refund arrives.
Catch up on unused RRSP contribution room with a larger loan and pay off the balance over a longer period.

Still wondering if it’s right for you?

If you’re thinking about taking out an RRSP loan, use our loan calculator to estimate your monthly payments, and then develop a personalized plan with your Prospera advisor.

Speak with an advisor about RRSP Loans