RRSPs can be tax-effective investment vehicles, especially if you are many years from retirement.
If you decide to take advantage of an RRSP, it is better to contribute at the beginning of the year to start the tax-free compounding of earnings within the RRSP earlier.
Also consider monthly contributions to your RRSP throughout the year, instead of a lump sum contribution at the end of the year or in the first 60 days of the following year.
You can make an RRSP contribution in a year and not claim a tax deduction in the same year if you think your marginal tax rate will be higher in a later year; you will still benefit from the taxdeferred growth of the investments in the RRSP.
Provided your undeducted RRSP contributions do not exceed your RRSP deduction limit plus $2,000, your undeducted contribution can be carried forward indefinitely, without penalty, for deduction in future years. This could be a substantial advantage if you claim the tax deduction in a year or years when you are in a higher tax bracket.
For your RRSP contribution to be deductible for a particular tax year, the contribution must be made by the 60th day following the end of the year. For the 2016 tax year, the deadline is March 1, 2017.
