RRSP planning –
Information you need
to make the right RRSP decisions
JANUARY 2012
What is a Registered Retirement Savings Plan?

A Registered Retirement Savings Plan (RRSP) is a
registered account that allows you to defer taxes on the
growth of your investment.

It is available to Canadians who have qualified
earned income.
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What are the benefits of an RRSP?

Contributions are tax-deductible.

The income earned and growth generated by the
investments in your RRSP is tax sheltered until withdrawn.

At age 71, you can transfer your accumulated RRSP into
a variety of RRSP maturity options.
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RRSP (registered) vs. non-registered
RRSP versus non-RRSP
110,000
100,000
90,000
Final Value in $
80,000
70,000
60,000
50,000
40,000
RRSP
30,000
20,000
Non-RRSP
10,000
0
10
20
YEARS TO RETIREMENT
For illustration purposes only.
Source: Mackenzie Investments RRSP Calculator.
Assumes a rate of 8% compounded annually. Marginal Tax Rate 40%.
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When should I start?

The earlier you start the better.

The longer your savings grow within a tax-sheltered
structure like an RRSP account, the more you benefit from
the effects of compound investment returns.

Contributions may be deducted in the calendar year that
they are received.

Contributions made during the first 60 days of the
calendar year may be claimed in the year made or
previous calendar year.
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The benefit of compound interest
COMPOUND INTEREST MAY NOT SEEM LIKE A GREAT BENEFIT OVER
ONE OR TWO YEARS, BUT IT ADDS UP OVER THE LONG TERM
Years contributed
Years invested
Total amount contributed
Total amount at the end of the period
John
Susan
10
20
$50,000
$169,198
10
10
$100,000
$152,455
This example assumes an 8% annual return during years invested. For illustration purposes only.
The power of compounding
$200,000
$169,198
$152,455
$150,000
$100,000
$100,000
$50,000
$50,000
$0
Total amount
invested
Final value of
investment
Total amount
invested
Final value of
investment
Source: Fidelity Management & Research Company.
This represents a hypothetical illustration of compound growth. Compound growth calculations are used only for the purpose of illustrating the
effects of compound growth and are not intended to reflect future values of any investment or return on investment.
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How much should I contribute?

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How much you need to save depends on

Your lifestyle

Goals

Target age for retirement
How much can I contribute?
The current maximum contribution to an RRSP is:


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The lesser of the maximum annual RRSP contribution limit
$22,450
for 2011
$22,970
for 2012, thereafter adjusted for inflation
or
18% of your previous year’s earned income, minus any
Pension Adjustment
If, for a given tax year, you do not make your maximum
RRSP contribution, you will have unused contribution
room that you can use in subsequent tax years.
How much can I contribute?

You are allowed to over contribute up to a lifetime
maximum of $2,000, without penalty.

An excess contribution is calculated as the total of all of
your undeducted RRSP contributions, minus your current
RRSP deduction limit and minus the allowable overcontribution of $2,000.

Excess contributions are subject to a 1% per month
penalty until they are withdrawn.

Information about your unused contribution room appears
in the RRSP Deduction Limit Statement section of the
Notice of Assessment that you receive every year from the
Canada Revenue Agency.
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Dollar Cost Averaging

A Pre-Authorized Purchase Plan (PAC) can help make
regular RRSP contributions easier and may help you
benefit from market volatility through dollar cost averaging.

With consistent regular contributions, you purchase more
units when prices are low and less units when prices are
high. This may result in a lower average price and higher
capital gain.
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What should I consider when choosing my
RRSP investments?
Some of the criteria to consider are:

Investment time horizon

Risk tolerance

Performance objectives

Diversification
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What type of investment can I purchase in
an RRSP?

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There are certain restrictions and limits on the types of
investments you can put within your RRSP; however,
generally segregated funds offered by life insurers and
mutual funds offered by fund companies are eligible.
What RRSP products are available?
Transamerica Life Canada offers various investment
solutions to help you achieve your investment goals:
Transamerica Guaranteed
Investment Funds
Segregated fund contract
Five for Life™
Guaranteed Lifetime Withdrawal Benefit
segregated fund contract
Transamerica Guaranteed
Interest Account
Guaranteed Interest Account
Speak to your advisor about the impact of withdrawals specific to segregated fund policies and GIAs to understand the impact to your guarantees.
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How many RRSP accounts and investments
can I have?

You may have as many RRSP investment vehicles and
accounts as you like as long as you do not exceed your
maximum contribution.

However, be aware of administration fees and other
opening or closing charges.
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Should I borrow to contribute?

You might consider speaking with your advisor to
determine whether borrowing to either maximize your
RRSP contribution or to play “catch up” on any unused
contribution room is suitable for you.

Transamerica Life Canada has a relationship with financial
institutions that can offer you an RRSP loan.
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What type of RRSP accounts are available?
Individual RRSP
Associated with a single
individual who is also the
contributor
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Spousal RRSP
An RRSP in which the plan
holder's spouse makes
contributions on behalf of
the plan holder
What happens when I turn 71?

By the end of the year in which you turn 71, you are
required by law to convert your RRSP into regular
retirement income.

At that stage, you may pursue one or a combination
of options:
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
Withdraw RRSP funds

Purchase an annuity

Roll RRSP funds into an RRIF
Special programs to withdraw RRSP funds
Home Buyer’s Plan (HBP)

Canadians can borrow tax-free up to $25,000 from their RRSP to purchase
their first home.

The loan must be repaid to the RRSP within 15 years after an initial 2 year
grace period.
Lifelong Learning Plan (LLP)

Similar to HBP except the money borrowed is to go to or return to a qualified
post-secondary school.

Annual withdrawal limit of $10K per year to a maximum of $20K; No limit on
number of times you can participate in the plan after you bring your balance to
zero.

Must be repaid in 10 years.

Some restrictions on amounts you can withdraw – contributions you made to
your RRSP during the 89-day period just before withdrawal.
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Tips to help make the most of your RRSP
Start early in life.
Invest regularly.
Pay yourself first strategy
Top up any unused contribution room.
The RRSP gross-up strategy
Diversify your investments.
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Your advisor can help

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Speak with your advisor about designing a customized
RRSP to suit your needs, and to choose Transamerica
investments that can help grow your savings over time
and that are appropriate for your personal investment
objectives and circumstances.
Notice to investment professionals
This presentation is for general information purposes only.
This communication is published by Transamerica Life Canada (“TLC”) with material obtained from a number of third
party sources. Any commentaries and/or information contained herein are intended for general information use. While
reasonable efforts have been made to ensure that the contents have been derived from sources believed to be reliable
and accurate at the time of publication, AEGON does not warrant the accuracy or completeness of the information
contained herein. Neither AEGON, nor its affiliates, advisors, or any other person accepts any liability whatsoever for any
direct, indirect or consequential loss(es) arising from any use or reliance on the information or opinions contained herein.
For complete details of each product described in this presentation, please refer to the respective Annuity Policy and
Information Folder. A more detailed description of the Fund(s), including investment objectives, contractual features,
investment policies and Fund assets, and investment risks may be found in their respective Summary Fact Statements.
Transamerica Life Canada is the issuer and guarantor of the Transamerica Guaranteed Investment Funds contract and
the Five for Life contract.
Any amount that is allocated to the Five for Life or Transamerica Guaranteed Investment Funds Contract is
invested at the risk of the contract holder and may increase or decrease in value.
Compound growth calculations are used only for the purpose of illustrating the effects of compound growth and are not
intended to reflect future values of any segregated fund or returns on investment in any segregated fund.
Discuss the risks associated with borrowing to invest in segregated funds with your advisor before investing. Purchases
using borrowed money are subject to suitability requirements. Using borrowed money to finance the purchase of
investments involves greater risks than a purchase using cash resources only. If investors borrow money to purchase
segregated funds, their responsibility to repay the loan and pay interest as required by its terms remains the same if the
value of the segregated funds purchased declines. Under these circumstances, the investor should be advised to have
sufficient financial resources to repay the interest and to reduce the loan if required under the loan arrangement. Loans
are not offered by Transamerica Life Canada, AEGON, nor its affiliates.
® AEGON and the AEGON logo are registered trademarks of AEGON N.V. AEGON Canada Inc. and its subsidiary
companies are licensed to use such marks.
® Transamerica and the pyramid design are registered trademarks of Transamerica Corporation. Transamerica Life
Canada is licensed to use such marks.
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Thank You!
JANUARY 2012