RRSP Deadline Arrives At Midnight Monday As Markets Plunge
Posted March 2, 2009 12:00 pm.
This article is more than 5 years old.
The clock is ticking and time is running out for Canadians to make contributions to their RRSP for the 2008 tax year.
The deadline for putting money into your Registered Retirement Savings Plan occurs when the clock strikes midnight Monday.
But observers have indicated that the crumbling economy has Canadians taking a second look at their deposits.
“For a couple of times today I’ve seen the Toronto Composite Index down over 500 points,” lamented Fred Ketchen of ScotiaMcLeod Equity Training. “That’s a very significant decline.”
The Dow also took a beating Monday, down nearly 300 points and below the 7,000 mark for the first time in 11 years. The main reason: more bad news from AIG, an insurance giant that lost a staggering $61.7 billion in the fourth quarter.
The U.S. government has rushed to the rescue again and will plow another $30 million of taxpayer funds into the wilting company if necessary. That’s on top of the $150 billion in loans that have already been handed over.
But it did little to inspire the confidence of investors who took their money elsewhere.
“This is the largest corporate loss in history,” relates Ketchen.
It’s also part of the reason contributions are expected to be much smaller this year, with people turning to more secure investments like bonds or GICs (Guaranteed Investment Certificate).
“It has been a little bit quieter this year,” Kathryn Del Greco VP Investment Advisor TD Waterhouse.
“Certainly with the market movements over the last few months. But do not not make your RRSP contribution because of the stock market’s volatility.”
RRSPs still hold some advantages: investors receive a deduction for their contribution and the earnings in your plan compound tax-free. Once the money is withdrawn, it’s taxed, but income earned from RRSP investments is not.
The maximum contribution you can make to an RRSP this year is $20,000. If you can’t afford the maximum, the government allows you to carry over any unused portion indefinitely.
Should you top up RRSPs with investment loans?
