The deadline to make contributions to your RRSP is March 3rd! Take a few minutes to learn more about where that money is going and what you can do with it.

What are RRSPs anyway?

RRSP stands for “Registered Retirement Savings Plan.” This program allows you to save money for retirement tax-free. You can contribute to your RRSP every year until December 31 of the year you turn 71 years of age. Once you’re over 71 years old, you can no longer contribute to your RRSP, but you can still withdraw unused money.

What would you use your RRSP money for? Well, you can use it to buy or build a home!

RRSP Home Buyers’ Plan (HBP)

The HBP allows first-time buyers to withdraw up to $25,000 tax-free in a calendar year to purchase or build a principal residence. If you are related to a person with a disability, you may also qualify for up to $25,000 to go towards the purchasing or building of a house for them.

You’re probably thinking $25,000 isn’t much when talking about buying a new home, but with first-time buyers only needing a 5% down payment, that $25,000 can go a long way (assuming you have money saved up). And to be clear, you don’t have to withdraw $25,000; that’s just the maximum amount. Take only what you need!

Of course, it wouldn’t be much of a retirement savings plan if you weren’t required to pay that money back over a period of time. The first repayment is due the second year following the year you made the withdrawal. The repayment period can span 15 years at the most.

Making an HBP withdrawal is a six step process:

1) Make sure you meet all conditions for HBP

2) Fill out form T1036

3) Give form T1036 to your issuer

4) Withdraw funds from your RRSP

5) Issuer sends you T4RSP statement

6) File your income tax and benefit return

Does that all sound way too confusing? Don’t worry, click here and everything is explained! It’s easier than it sounds.