Sunday, February 3, 1991 - North Shore News - 31

| y should you buy an RRSP”’
Should you buy one?’

| nswers, read on.”

66 You've likely heard that the government 1s
changing the rules on RRSPs. Not for this
year’s contributions but for next year’s
contributions. Problem is, under the new rules,
next year’s contribution could be seven years

away. 99

Essentially, the
government will alter

two basic RRSP rules:

how much you can
sock away, and when.
At the end of 1991,
provided you don’t have
any other form of private
pension plan, you'll be
allowed to contribute 18%
of your income annually

to an RRSP, up to $11,500.

Also, you'll be allowed

to let annual contributions
accumulate for up to seven

66 With the

new rules,
planning becomes
even more of

an issue. 99

years. The way it works
now. if you don’t take
your annual contribution.
you lose it. With the new
rules, that isn’t so. For
example, under the new
rules, if you're allowed to
contribute, say, $5,000
each year, you can wait
seven years, contributing it
all in the seventh year —
seven times five equals a
whopping $35,000!

These two key |
changes give you new
investment choices.

For example, if you buy
a home, you could use the
money that might have
been invested in seven
years of RRSPs to pay off
a substantial chunk of
your mortgage. In the
seventh year, you could
then borrow against the
house to fund the RRSP, a
contribution that could
well be $30,020 or $40,000
and up. Not +: «.ad case of
having your cake and
eating it, too.

This scenario «ay not
be right for you, but
that’s our point.
Planning becomes
even more of a critical
issue under the new
rules.

I repeat, ‘RRSP: yes or
no”, is a question of
sitting down and assessing

your personal situation.
Under the upcoming rule
changes, that decision
becomes more complex. It
won't just be a matter of
why but when?

In the Fall of 1991,
Revenue Canada will start
sending statements to each
and every one of us,
detailing how much we
can contribute for 1991,
based on our 1990 income.
It’s a good idea when
you get that notice, or
even before, to call and
make an appointment with
one of our retirement
planners.