A Registered Retirement Savings Plan (RRSP) is a government-approved program that allows you to save a part of your income that without paying tax on it.
The government created RRSPs so that Canadians could have a tax-deferred method to save and invest for their retirement.
You can realize the full potential of your long-term investments in your RRSP with sound investment advice from the team of Financial Advisors—put in place by the Trustees to help you with your Financial Plan.
Two essential benefits to an RRSP:
Funds contributed to an RRSP are not taxed in the year contributed. Taxes will generally be paid when the funds are withdrawn for retirement, usually at a lower tax rate.
All amounts in an RRSP grow tax-free for the life of the plan.
How your PSRT Group RRSP(s) differs from a traditional RRSP:
In a regular RRSP, the member must make the contributions with after-tax dollars, which may limit the amount that is available to contribute. The refund comes only after a tax return is filed.
In your PSRT plan the full contribution amount is invested when it is received by PSRT from the contributing employers. There is no tax paid and no waiting for the refund.
Over the years, we have had Members ask if it is possible that their spouse—while not part of an Employer Contribution arrangement with PSRT—could enjoy the benefits of being a PSRT Member and hold their retirement funds (and other accounts) at PSRT.
You asked, we listened. In addition to a Member’s individual account, and/or any spousal RSP at PSRT, a Member’s spouse may also hold his/her personal RRSP accounts at PSRT.
For example, a Member (James) and his spouse (Claire) may hold the following RRSP accounts at PSRT:
RRSP registered in James’s name (contributed pre-tax by the Employer)
Spousal RRSP registered in Claire’s name (contributed to by James)
Spouse RRSP registered in Claires’s name (contributed to by Clair)
If you have a spouse, you can use a spousal registered retirement savings plan as an investment account to complement you and your spouse’s (or partner’s) retirement. The main advantage is that they allow you to contribute money tax-free each year, but have the funds accumulate in the name of your spouse. Your spouse or partner will see a tax-free return on that money until it is withdrawn.
Spousal RSPs are used to lower the tax burden for couples in their retirement.
For example, if a Member (James) were to have significantly more funds in his retirement account than his spouse (Claire), this would push him to a higher (marginal) tax bracket as he withdraws from his RRSPs.
If James and Claire had taken advantage of a spousal RRSP, James would receive the tax benefits in the contribution years.
At the same time, Claire would enjoy tax-free growth and (potentially) lower-taxed withdrawals in retirement. However, since income splitting has been introduced, the spousal RSP advantage is not as relevant if spouses are the same age.
In cases where a younger spouse or partner is involved, there is still a significant advantage to having the majority of retirement funds in the younger spouses name. A spousal RRSP allows for lower and later mandatory withdrawals which can be very worthwhile in proper financial and retirement planning.
If James and Claire are taking advantage of every RSP account option available to them at PSRT, their accounts would look like this:
1. RRSP registered in James’s name (contributed pre-tax by the Employer)
2. Spousal RRSP registered in Claire’s name (contributed to by James)
3. Spouse RRSP registered in Claire’s name (contributed to by Claire)
A Tax-Free Savings Account (TFSA) is a registered account that allows for investments to accumulate earnings with absolutely no tax on the gains. The amount of money that can be contributed to a TFSA is limited each year, but the allowable amount accumulates if you do not use it.
A TFSA can be used for any savings goal and withdrawals can be made free of tax.
Why hold your TFSA at PSRT?
While contributions to your TFSA at the Trust are voluntary (and can not be part of your Total Wage Package), holding your (and/or your spouse’s!) TFSA at PSRT will allow you to participate and invest in the same great investment vehicles held in your RRSP.
Yes, you read that right. Many confuse the word “savings” in the TFSA to mean that it is like a savings account at the bank. This assumption could not be further from the truth.
Any investment vehicle held in your RRSP can be held in your TFSA.
When a Member is no longer eligible to contribute to an RRSP and has maximized their contribution room in the TFSA, PSRT offers Members the option to open a non-registered account. These accounts can hold identical investment vehicles as RRSP and TFSA accounts but do not provide the tax benefits of those accounts.
When sufficient demand (requests) from the members exists, and when it is practicable from an administration standpoint, the Trustees will add other products such as Registered Education Savings Plans (RESPs) and Registered Disability Savings Plans.