Understanding RRSPs

Understanding TFSAs

A Registered Retirement Savings Plan is a government approved plan through which money is saved for retirement years. Your contributions, within limits, are tax deductible, and the income earned is tax sheltered.

It is important to start investing money during your peak earning years to build a comfortable retirement fund. At Carpathia Credit Union, we offer RRSPs which are easy to understand. These plans provide investment flexibility and are secure. An RRSP is a tax sheltered savings plan that allows a tax break now, and allows you to tax shelter contributions and interest to provide an income for future years. Each dollar contributed (subject to Revenue Canada's limits) to the RRSP gives a tax deduction for the same amount. When you take money out of the RRSP, it is treated as taxable income. This can be timed to occur when your income is lower.

Whether you invest in a Variable RRSP, where the interest rate varies with changing marketplace conditions, or a Fixed Term RRSP, where a fixed rate of interest is earned, with as little as $25 per month you can be well on your way to a comfortable retirement. Speak with our Financial Services Representatives to set up a plan to suit your lifestyle.

Fixed Term RRSP

• $500 minimum deposit
• Interest compounded annually
• Term of 12 months to 60 months
• Non-redeemable prior to maturity
• Highly competitive rates

Variable Term RRSP

• No minimum deposit
• No penalties for early withdrawal
• No waiting period
• Rate of interest varies with current rates and is always competitive
• Interest compounded annually
• Automatic deposits free of charge

In the calendar year that you turn 71 years of age, you MUST convert your Registered Retirement Savings Plans (RRSPs) into a RRIF. A RRIF is a tax sheltered investment vehicle designed to provide a retirement income after age 71 from funds accumulated in an RRSP. Payments may be received monthly, quarterly, semi-annually or annually.

A RRIF may allow you to select the length of time you wish to lock in your interest rate and - while there is a minimum amount required to be withdrawn each year - you can elect to take more if you want or need to.

There are no fees associated with a RRIF. Every dollar put into a RRIF comes back to you, plus interest, and the interest is tax sheltered until you withdraw it. There is a $50 transfer out fee per term if you transfer your RRIF to another financial institution. If you have a RRIF elsewhere, we’ll transfer your RRIF to Carpathia Credit Union simply and easily and we’ll pay any transfer fee of up to $50 per plan.

Your RRIF can also be transferred to a surviving spouse on a tax-deferred basis, if directed by a designation of beneficiary or by a will.

Our expert financial services representatives will discuss your options and explain all of the details of our plans. Members can choose from a Variable Rate Plan or a Fixed Term Plan.

Variable Rate

• Interest calculated on daily closing balance
• Open term; no penalties for withdrawal
• Interest rate fluctuates with market conditions

Fixed Rate

• Terms from 12 months to 60 months
• Interest compounded annually

A TFSA can provide you with a savings vehicle to earn tax-free investment income.

• Available to Canadian residents age 18 and older
• Contributions are not tax deductible
• Contributions may only be made by the owner
• Income earned and capital gains are tax sheltered
• Withdrawals of contributions and/or income are/is not subject to tax
• Maximum contribution limit for 2017 is $5,500 (current contribution limits can be found on the Canada Revenue Agency website)
• Unused contribution room may be carried forward and contributed in a future year (as of 2016, the limit was set at $5,500. The 2015 limit was $10,000; 2013/2014 limits were $5,500; and 2009 to 2012 limits were $5,000)
• Withdrawals (capital and income) will increase the unused contribution room
• Unused contribution room will be reported on your annual CRA Notice of Assessment

Commonly referred to as Guaranteed Investment Certificates (GICs), our term deposits offer competitive interest rates and peace of mind knowing that the investment is solid and secure.

• Terms between 1 to 5 years
• Rates guaranteed for term length
• Rates posted daily at Credit Union branches
• Interest calculated daily and paid either on the anniversary date of the term or at maturity if the term is one year

FAQs
1. What is a Term Deposit?
A Carpathia Term Deposit is a fixed deposit investment for a fixed period of time.

2. Is a term deposit better than a saving account?
Yes, if you do not require use of these funds for an extended period of time. The interest rate is much higher than the interest paid on a savings account. Interest rates are market driven and are guaranteed for a specific period of time, thereby maximizing your interest earnings.

3. Are term deposits flexible?
The maturity dates on all term deposits are flexible, you select the term. You also choose whether the interest is compounding or deposited into your chequing or savings account upon maturity.

4. How secure is my term deposit at Carpathia?
Deposits are 100% guaranteed by Deposit Guarantee Corporation of Manitoba

5. How can I keep track of my term deposit?
To assist you in accurate record keeping, term deposits are outlined on monthly member statements. These are available at no charge

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