You can profit from RRSP contribution limits from past years

Everyone has some regret about the missed opportunities of the past. When the missed opportunity is financial and affects your retirement, the result can be devastating.  And everyone knows that ‘opportunity missed is opportunity lost’…Right?…Wrong!  While it is impossible to turn back time, with your RRSP, the missed opportunities of yesterday can be profitably seized today to provide for tomorrow.

The RRSP rule that allows you to do this relates to your unused RRSP contribution room.  While it is not a prudent investment strategy to consistently miss or delay RRSP contributions, the fact remains that sometimes an individual is unable to secure the funds necessary to contribute in any given year.  Realizing this fact, the government instituted a provision which allows individuals to carry forward unused RRSP contribution room (starting with 1991 contribution limits) indefinitely.

While such a generous ‘catch-up’ provision exists, it is only beneficial to an individual if it is utilized.  Saving the funds necessary to make use of the ‘carry forward’ amount may not be easy.  Indeed, if you didn’t have sufficient funds at the time thcontribution room was initially created, it is unlikely that you will have saved the amount that has accrued since that time, especially if you aren’t even sure of the actual amount of this unused contribution room.

It will therefore be necessary for you to undertake measures to determine the total amount of unused RRSP contribution room available to you. You can then develop a plan for securing sufficient funds to make your contribution and decide the most tax-beneficial period in which to claim the deduction. 

It is important to keep in mind the fickle nature of government when it comes to income tax legislation.  What is provided for today, could be eliminated tomorrow.  So while you may have missed the first ‘knock of opportunity’, you should ensure that you answer back before it goes away for good!

For more information on RRSPs and unused contribution room speak with your Financial Consultant.

Financial tip from Merrill Lynch