Do you receive RSP statements from multiple companies?  All of this information streaming in can be overwhelming, especially when added to the barrage of RSP advertising that inundates us every February. Perhaps it is time this year to do a little financial housekeeping. Like never before, it is imperative to see exactly what you have in your RSP accounts, how they are performing, and what fees you are really being charged.

As a starting point, consider consolidating your RSP accounts to reduce some of the needless paperwork in your life. While putting all your eggs in one basket is generally not a good idea, it is also important to make sure the risk of holding your investment at one financial institution is real and worth the extra paperwork. If you have investments spread all over primarily because of deposit insurance concerns, remember that most financial institutions have several subsidiaries that can each cover $100,000 in deposits.

There is no set standard on how much to hold at different financial institutions, but there can be advantages to hold more of your RSPs in one company.  With a larger account you will likely get more attention, better service and lower costs.

It’s easy to transfer from one company to another. Do a little extra analysis this year then decide where it is best for you to hold your investments. Your advisor, banker or broker will handle all the paperwork to make the transfers. (Just make sure you don’t cash out the RSP or there will be tax consequences.)

One of the most important considerations when choosing a home for your RSPs is to go with an advisor who has earned your trust and with whom you have a good working relationship.  In these turbulent times trust is everything. – Karin Mizgala

Karin Mizgala is a Vancouver-based fee-for-service financial planner with an MBA and a degree in psychology. She’s the co-founder of the Women’s Financial Learning Centre.

With the March 2 RSP deadline looming, it’s often the only time of year we give retirement savings much thought.  While most financial institutions extol the virtues of RSPs (it is a big part of their business after all), I’m seeing more articles and debate about their usefulness.

From RSP supporters we hear about the benefits — you can deduct RSP contributions from income so you pay less tax and the income earned in an RSP is tax-sheltered.

On the flip side, naysayers argue that RSPs aren’t really a tax savings, just a tax deferral because you have to pay tax when you withdraw the funds.  The drawback is that if you are still in a high tax bracket when you withdraw the money at retirement, then you pay tax at that higher rate and you might also lose the Old Age Security pension benefits.

The RSP dissenters often recommend paying off your mortgage, keeping money in your corporation if you have one or investing outside your RSP and now the TFSA.

Who’s right?  For most Canadians, I still think that RSPs are the way to go (and I don’t sell investments, so no vested interest here).  You can always use your RSP tax refund to pay down your mortgage.

RSPs almost always make sense if you fit this profile:

• You are under 50 with 10-15 years to retire
• You have less than $200K invested in RSPs to date
• You are in the highest tax bracket now
• You pay less than 6% on your mortgage
• You have a balanced portfolio of conservative stocks, bonds and cash investments in your RSP

RSPs may not be the best option for you if you’re close to retirement, already have tons saved in your RSP account, and expect that your retirement income (after any income splitting) will put you in the highest tax bracket (over $126,000/year).

If you’re not sure what camp you fall into, then go ahead and put money into RSPs.  Most people think twice about withdrawing money from an RSP before retirement so there’s a greater chance that you’ll have some savings when you retire even if you do have to pay some tax.

Karin Mizgala is a Vancouver-based fee-for-service financial planner with an MBA and a degree in psychology. She’s the co-founder of the Women’s Financial Learning Centre.