Whtby Fiee Prus, Wacfrsday. January 27, 1M0. Page 15 MAXTIME TAX TIMTAX TIETAXTIETATMEAXTMZ accouâtaiits What in au RRSP? Au RRSP je a special vohicle created by goverriuent te, permit you te iuvest fuuds sud croate savinge for retirement. it je a trust of which you, the contributor, are the beneficiarY sud a finaricial situation tbat you select je a trustea. Contributions to au RRSP are tex deductible. Tex on the contributions je doferred until the money je withdrawn as je the tex on the eanings on investments made by the RRSP. Therofore, you ceni make contributions te your RRSP when you are in a high tex bracet, saving the taxes on these funds in the tex year as you do e,sud withdraw your contributions as well as ear*nings on your contributions when you are retiring sud presumably in a lower tex bracket. Furthermore, hacause the contributions sud earmings are not texed within the plan, you earn considerably more ince on funde inside au RRSP than on fuuds invosted outside oe. This je because the untexed amnounts are left in the plan sud the earnlngs are thon parmitted te compound. ActuaIly, you need not ha retiring te withdraw the funds from your RRSP. These can ha taken eut any time and will ha taxed in your hands at your marginal tex rate at that time. Se, for exemple, should you decide te, take a sabbaticel fromi work sud earn no inceme for a one-year period, anY RRSP funds you withdraw wil he a ted at your marginal rata during your sabbatical. W. would add one nota of caution, however. Altheugh thora je nothing in the tex legisation that would prevent you from making aarly withdrawale, yeu will have te make sure that your plan permits them sund dotarmino if thora are auy special conditions imposed beforo you cau do se. Withýdrawals vjül aise ha subjeet te withholding tex that will ha daductible from auy other tex yeu ma have te pay or will ha rofuuded when you file your tax return. Interest on funds borrowed te centribute te su RRSP je net deductible for tex purposes. Furthermore, you are net permitted te, recognize suy capital lasses on proparty you contribute. Setting up an BRISP RRSPs eau ha purchesed from Most finsucial institutions, including banks, trust companies, life insurance agents or stock brokers. You may cheose te, have your RRSP savinge invested in fuuds set up by the financial institutions, or y ou may choose te select your RRSP investments yoursef b aquiring a sel-diectd Sp., Tex legisiation prescribes the typa of investmente RRSPs can make. For example, RRSPs eau invest in government bonds, sheres or bonds of corporations listed on Canadian stock exchanges, certain ennuities sud certain mutuel funds. RRSPs are intended to ha passive invostors. They are taxed on any business income thaY earn. For a -more specific description ôf RRSP jnvestnients, sea your tax professional. R.RSPs must mature in the year the beneficiary turns age 71. At that time, the funds eau ha rolled tax-frea inte an anuuity or used te acquire a registered retiremont income fund. These vehicles allow you te spread the payments from the your RRSP eut over timo sud, thereforo, lessen the tax effeet Of coWlapsing the RRSP. The implementation Of anY tex-saving strategY is based on yo asonal finsucial situation. rofessional advice should ha obtained before implementing any of the above suggestions. Type of RRSP PROM PAGE 13 want te ceutrol your RRSP investments? A self.directed RRSP shlows you te make yôur own decisions about where te invest your money. You are able te take greater risks with your funds, but you niay make greater financiai gains in return. Do you feel that mutual funds are tee risky? The -risk involved depends on the type of mutual funds in which you invest . For exemple, funds invested in common stocks may ha risky but may yield greater rotures. Money invested in governient bonds may be less risky but may yield Iower returns. F Derek Dutka RRSP advice Soarchig for the best RRSP? You s3hould because it eau mean a groat deai to you and your future. Even oesper cent more par vear for a person starting at ae 30 through to age 66 puttin ele41,000 a yeer, could mean an addiinal $200,000 p le. for retirament. But where cian you go for unbiasad advice? les ver difficuit becausa everyone is promotin& their' own roducs.Befk5 talk about RRSPs and terrn deposit rates that threy' have developed. Trust comparies talk about 'their' guaranteed invastmnent RRSPs, epen accounts and even bond and equity funds they'have developed zand manage. Credit'unions, too, have 'thei? deposit acconis available for RRSPs. les alwmays 'their' product.s that 'they' doveloped and that 'they' manage and they' control. That'swhy you sliould check eut independent financiel planuers. Everthng they offer is from other cerpnis Only they make available ail options including such things as investuient funds, GICs (guarantaed investment certificates), insurance produets and/or aunuities. These planners have ne froduct of the r own te aitfer, but are simply independent agents for a variety of products. They attempt te match your personal requirements with the right investment vehicles for you. Net ail, but many pianners can offer stocks. And if you consider yourself an expert in investing in stocks, you should consider a self.administered RRSP availeble fromn a stock broker. But if you are like me sud kuow littie about stock investing, that type of prograxn should not even ha considered. You can g et _rograms that offer a choice of many different investment funds and terrn depeosits in one RRSP prograre. If you choose only two -or t7hiree, that m eans you could have two or three different money mianagers (experts) iooking after your RRSP ou a fuil-time, day-by-day basis. Over the lon g terni, many professonally managed investinent funds (both incomne and equity) have outperformed traditional termn deposit RRSPs. Do you have ail terrn de sits in your RRSP? What interost rate will you get this year? Would you like to earn more? Take time te look at al the RtRSPs available, and make sure you include au unbiased, independent financial planner. It mnight ha well worth it. adrsemleflt Smart investing at retirement nets euritv, comfort and peace of mind Picture this sconarie. You've worked hard te, acquire your property equity or Inest egg'. ( Call it what you wilI, it stili oquates te your itfe savings.) You are new wondering which direction te take at retirement tirre. Smart investing is the key te a secure and comfertable future. Let's face il. You wouldn't use a plumber te repair your automobilel Se ià makes senso te censuft a specialist in retirement investnients when you are faced with the crucial decision of which action te, take te make the most et your savings. Jack Moçarnan specializes in retirement income planning. Jack has been helping people with annuities andi retiremnent planning since 1959 in the Oshawa/Durham area. A tailored invesiment plan te suit yur needs and prierities is the geaI at Mcçarnan Insurance AgencieS. There are ne fees fer his service. Jack Mcçarnan wil rovide yeu with. a sensible, wise Cheice when planning your retirement inceme. A persenal meeting in his office or your home will be the f irst stop te discuss the options available te yeu. A cemplete personal service is rendered, providîng you with the handling of ail1 decumentation and Revenue Canada forms. Sutitee 83 ing St.laniWeSterv1-328 For Every $1,000.00 You Borrow A CIBC. RRSPLA Makes You Money lst Year's lnterest $57.50 Earned (Based On 5.75%) PLUS YOUR INCOME TAX SA VINGS... YOU GANT GO WRONG! Contact one of our RRSP Specîalists at any one of the following branches: 655-3361 668-3351 430-1810 You Pay $86.41 Per Month $36.92 At Prime Rate (Variable Or Fixed Rate) Establishongan RS 1 . - . a