JUST THE RRSP FACTS PLEASE

(NC) - RRSP season is quickly approaching and this year, changes to the rules and limitations will play a role in your financial planning. Knowing these changes will form a base from which you can begin to assess your financial situation. When you sit down to evaluate your portfolio, here are some facts that you should consider:

Deadline for 2002

Contributions RRSP contributions for 2002 can be made up to the close of business on Wednesday, February 28, 2003.

Contribution Limits

Each year the government allows you to contribute a specified amount to an RRSP. This limit is based on the amount of income you've earned from the previous year's employment and the "value" of your previous year's Pension Adjustment, should you be a member of a registered pension plan (RPP). Your Pension Adjustment is determined by the calculated value of the pension benefit which accrued to you during that year. You will find the amount of this benefit in Box 52 of your annual T4 or Box 34 on your T4A. The current RRSP contribution limit is 18 per cent of your previous year's "earned income" (to a maximum of $13,500), less your previous year's pension adjustment (PA), plus the current year's pension adjustment reversal (PAR). Based on current legislation, the contribution limit will remain the same until the year 2003 and then rise to $14,500 in 2004 and $15,500 in 2005. The easy way to determine your limit is to check the Notice of Assessment sent by Revenue Canada when you filed your taxes last year.

It is advisable to contribute the maximum to your RRSP, if possible. Making the maximum allowable contribution ensures you reach your retirement goals faster and receive a larger tax credit. Carry Forward Rules RRSP contribution room that you don't use can be carried forward indefinitely. Unused contribution room is listed on your Notice of Assessment from Revenue Canada.

Foreign Content

Up to 25 per cent of the book value (the purchase price plus any acquisition costs) of the assets in an RRSP account can be a non-Canadian investment. This is an increase of five per cent from last year. - (NC)

- From News Canada