Contrary to popular belief, there is no age restriction to open an RRSP (Registered Retirement Savings Plan).
Here are the requirements to open an RRSP for minors:
– A SIN (Social Insurance Number)
– Legitimate earned income
– Recorded income with proper documents
– Filed T1 tax return
Advantages of a Minor RRSP
There are lifelong advantages of opening an early age RRSP. Here are some of them:
– There is no need to make contributions right away. Contributions can be made anytime later – with no time limit.
– RRSP room keeps accumulating, which can be carried forward indefinitely
– Increases lifetime contribution limits
– Allows minors to contribute to RRSP right after starting in the work force because of the available contribution room.
– RRSP deduction can be claimed later on when there is enough taxable income.
– Provides income-splitting opportunity for business-owner parents. Kids can work as an
employee for their parents’ business and salary paid to them will be tax deductible and it will create contribution room for kids.
– Provides an opportunity to teach kids about personal finances.
– Contributions start growing tax free inside an RRSP.
Author/Copyright: Ahmed Dawn www.adawnjournal.com
Disadvantages of a Minor RRSP
– Not all financial institutions offer minor RRSP.
– A co-signer may be required.
– Financial institutions may limit what types of products can be purchased.
The best thing to do would be shop around and find the right institutions that suit your needs. Minor RRSP can be a great investment vehicle towards a better financial future with lifelong benefits for kids.