RRSP Contribution - Canada

[My Dream]

What is the earliest age that you can contribute to an RSP (Canadian) considering you have that allowance? My DW and I were discussing this yesterday and I she thought it was 18. She also mentioned that it would probably be to our son's advantage to wait until he's in a higher tax bracket.


Thanks

 

[bosco]

there is no minimum age provided you have the income allowance. There is only a maximum age.

 

[kcowan]

You need to make a judgement as to the likely tax rate upon withdrawal at age 69. If it is less than his current tax rate, then it is a good deal. If it is equal then there in NO advantage to an RRSP. With inflation, the odds of tax rate creep are very high so it is highly unlikely that it is tax advantageous.

RRSP contributions work best when you are at your peak earning years in your 40s and 50s when your tax rate is very high.

 

[NinjaPigeon]

Why would it not be a good deal if the tax rates were equal? You get to keep the bulk of the return earned with the government's portion of the invested money.

 

[bosco]

Why would it not be a good deal if the tax rates were equal? You get to keep the bulk of the return earned with the government's portion of the invested money.

not necessarily because RRSP withdrawals are taxed as ordinary income, at a significantly higher rate then dividends or capital gains