Before you start
You may need more than one RRSP account:
- Your employer may offer a defined contribution pension plan - that's a group RRSP.
- In addition, you may have enough contribution room to have your individual RRSP.
For your individual RRSP, determine which saving & investing strategyyou'll follow so that you know what type of RRSP account you need and where you'll open it.
Consider having just one individual RRSP account, at least at the beginning when you're learning, even though you may eventually decide to have more than one (depending how you invest). The fewer registered accounts you have in each program, the better - because it'll be easier to track your contribution limit.
- All of your contributions added together cannot exceed the annual limit of each program.
- If you do exceed it, you’ll be charged 1% of the excess amount for every month you are in excess.
- So it’s important to track your accumulated contribution limit and know how you’re using it.
It's like any savings or investment account - just that it's registered
Opening a registered account is similar to opening a similar non-registered account. Follow the step-by-step checklist to open the savings / investment account you've chose for your RRSP.
While completing the application, you will need to designate a beneficiary. In the event of your death, the money in the account goes tax free to that person as cash.
- In all provinces other than Quebec you can name the beneficiary right on the application form (in Quebec, it's done through a will).
- Anybody can be named as beneficiary.
Assess convenience and account fees. There may be room to negotiate them down.
- Financial institutions usually charge an annual fee of $100-$130 on RRSP accounts with less than $15,000 or even $25,000, but some institutions may offer waivers.
- Even if there is a fee on a registered account, the bank may waive it in some situations, for example if you have other products/accounts or keep certain minimum balances.
- Registered account fees, unlike for non-registered accounts, are not tax-deductible.
- Over the years the fees can add up so look for no-fee or low-fee registered accounts.