Rrsp Optimizer
Marianna
We've not had any other reports of this happening, nor could we recreate it in a test return. I'll give you a few things to try which hopefully solve it for you, if not please advise us so we can look more closely at this.
I had a very lengthyl conversation about RRSP optimizer. I have cleared my cache, tried another browser and tried another laptop and the RRSP optimizer is still not working. The options does not even come up.
5. On the next page, use the cursor to find out how much of your RRSP you need to claim, or if you need to contribute more before the deadline (end of Feb). The software will calculate your possible tax refund vs you current refund
I followed all of these steps but the optimizer will still not come up. The optimizer screen doesn't display. I have both my husbands and my RRSP limits entered and our RRSP contributions for the year. It does not work!
I forgot to mention, the problem first appeared on the iPad app, then I switched to the web version (MacOS) hoping for a fix. Then, was hoping after the CRA web update that was completed on Feb 22 would help. No fix.
I initially purchased TurboTax Basic. While working on my taxes it became apparent I needed TurboTax Premier so I upgraded. My screen now shows "TurboTax Premier 2018". But when I go to Tools, Optimizers, all of the listed optimizers have check-marks beside them but are grayed-out. I can't select any of them. Why?
I have a very simple return where I have just a T4, T4A and an RRSP Contribution. I am hoping all I need is Turbo Tax Basic but I can't find any confirmation that TurboTax Basic will allow the entry of RRSP Contributions. I do not need the RRSP optimizer.
I have the same question. My Tax profile for 2020 is pretty simple includes T4, T4A and RRSP. So it would be nice to know is RRSP form is included. On comparison page it only mention RRSP optimizer tool which I find pretty useless because it only tells you that more you put in RRSP more you get in refund. This can be done by placing different amount on RRSP contribution page anyway. Besides in many cases I know exactly how much I want to put into RRSP based on my room and money I have available. So to make a long story short it would be nice if RRSP page is included in TurboTax basic. I do believe it is but would be nice to have it confirmed. Thanks!
Contributing to your RRSP has a significant impact on your taxable income. The amount you contribute within the limit can be deducted from your total income, thereby reducing the income tax you owe for that year. This reduction in taxable income can be a powerful tool in tax planning, as it not only provides immediate tax relief but also allows your retirement savings to grow tax-deferred. This means that any investment growth in your RRSP is not taxed until you withdraw money from it, ideally at retirement, when your income and possibly your tax rate may be lower. Understanding how your RRSP contributions affect your taxable income is a key component in crafting a robust financial strategy that aligns with your current and future financial goals.
The first step in managing your RRSP is knowing your current contribution amount and room. This information is readily available through several Canada Revenue Agency (CRA) services. You can find your RRSP contribution limit on your latest notice of assessment or reassessment. This document is sent to you after you file your tax return and contains vital details about your RRSP contribution room.
For convenience, the CRA provides online tools like the My Account service and the MyCRA mobile app. These platforms offer easy access to your RRSP contribution limit, allowing you to check your contribution room anytime. Using these digital services ensures that you have the most up-to-date information, which is essential for accurate RRSP planning.
Your deduction limit statement, part of your notice of assessment, is a crucial document. It details your contribution room and includes any carry-forward amounts from previous years. Understanding this statement is key to planning your RRSP contributions effectively and making the most of the tax benefits they offer.
If you have complexities in your financial situation or are unsure about interpreting the information, consulting a financial advisor is advisable. They can provide personalized advice to help you understand your RRSP contribution room and plan your contributions strategically.
One of the primary benefits of contributing to an RRSP is the immediate impact on your taxable income. Contributions to your RRSP are tax-deductible, meaning they can be subtracted from your total income on your tax return. This reduction can lower your tax bracket and potentially result in significant tax savings.
Another key advantage of RRSPs is the tax-deferred growth of investments within the plan. The returns on your investments (interest, dividends, capital gains) are not taxed as long as they remain in the plan. This allows your savings to grow more rapidly than they would in a taxable account.
Contributing to an RRSP is a cornerstone of retirement planning. By consistently contributing up to your limit, you are building a substantial nest egg for your retirement years. This disciplined approach to saving ensures you have a comfortable financial cushion when you retire.
RRSPs offer a range of investment options, allowing you to tailor your portfolio according to your risk tolerance and investment goals. From stocks and bonds to mutual funds and GICs, the diverse options within an RRSP enable you to build a diversified investment portfolio.
The timing of your RRSP contributions can significantly impact their effectiveness. One approach is early-year contributions, which allows your investments more time to grow within the tax-sheltered environment of the RRSP. Alternatively, regular monthly contributions can help in budgeting your investment income and take advantage of dollar-cost averaging. Some prefer lump-sum contributions at the end of the year, potentially using bonuses or other lump sums of money. Understanding your cash flow and investment goals is key in determining the best timing strategy for your contributions.
For those who haven't maximized their RRSP contributions in previous years, the carry-forward room is a valuable feature. This unused contribution room can be a strategic asset, particularly in higher-income years when the tax benefits of RRSP contributions are more pronounced. By planning to use this carry-forward room in years where your income is higher, you can optimize your tax savings and effectively increase your retirement savings.
While maximizing your RRSP contributions is beneficial, it's crucial to maintain a balance with other savings and investment options, such as a Tax-Free Savings Account (TFSA). A diversified approach to savings can provide financial flexibility and security. For instance, TFSA contributions are not tax-deductible, but withdrawals are tax-free, offering a different set of benefits compared to RRSPs. Balancing contributions between these two types of accounts can be an effective strategy depending on your financial situation and goals.
It's crucial to be aware of your RRSP contribution limit to avoid over-contributing. The Canada Revenue Agency allows a $2,000 grace amount over your limit each tax year, but exceeding this can result in penalties. Staying within your contribution limit is key to avoiding unnecessary financial consequences.
If you contribute to your rrsp by more than the allowed $2,000 over your RRSP limit, you will face a penalty tax. This tax is 1% per month on the excess amount that remains in your RRSP. It's important to monitor your contributions closely and rectify any over-contributions promptly to minimize penalties.
If you find that you have over-contributed towards your RRSP, taking immediate steps to correct this is important. Withdraw the excess amount as soon as possible. Be aware that while withdrawing the excess funds helps avoid further penalties, the withdrawn amount of excess contributions might be subject to regular income tax.
Accurately reporting your RRSP contributions on your tax return is essential. Ensure all contributions, including any over-contributions, are correctly declared to the Canada Revenue Agency to maintain compliance and avoid complications.
As we conclude our guide on RRSPs, remember that understanding your RRSP deduction limit and maximizing your retirement savings plan (RRSP) are vital steps towards a secure financial future. Utilizing the tax advantages of RRSPs is not just about planning for retirement but also about smart financial management today. At Pine, we understand the importance of holistic financial planning, including how your mortgage decisions intertwine with retirement planning. Contribute wisely to your RRSP, and let us help you navigate your broader financial landscape for a more secure and prosperous future.
In his example, Steiman used historical data for volatility and correlation and then assumed expected returns of 8% for Canadian, US and international stocks, 9.5% for emerging markets, and 5% for fixed income. With those inputs, the model determined the optimal portfolio with a target standard deviation of 12.5% would include an allocation of about 25% to Canadian stocks.
The great thing about portfolio optimizers is that you can keep tinkering with the inputs slightly until you get the output allocation percentages that match your gut feeling about allocating more to US stocks after their great performance last year.
@Steve: Sorry, but you misunderstand how the theory works. Given two assets, even if one has a superior expected return, the other asset will feature in the allocation if that other asset is sufficiently un (or anti) correlated with the first asset.
You state that the institutional investors are using these other allocation methods, but they still can not beat a passive portfolio consistently. That is all the justification I need to stick with a the couch potato approach of simple allocations, rebalanced annually. I personally find the uber-tuber far too complex, and am not seeing any data to support a benefit to it. Simplicity rules!
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