Are your employees eager to align their New Year's resolutions and financial goals? Making extra lump sum contributions to an RRSP within the first 60 days of the year is a proactive measure that can contribute to securing your financial future. Additional contributions can benefit employees and hold significant implications for employers in fostering the economic well-being of their workforce.
RRSP contributions made before February 29, 2024, can be deducted from 2023's income tax return. This presents an immediate financial advantage, as it lowers taxable income, potentially resulting in a tax refund for contributors. Knowing in advance the amount they've contributed and the potential tax benefits will enable individuals to better manage and plan their finances.
In addition to the tax advantages, harnessing the potential of compounding is another compelling reason to make contributions before the 2023 deadline. When employees contribute to their RRSP early in the year, their investments have more time to grow tax-free, helping them build a more substantial retirement fund over the long term.
Encouraging and supporting early RRSP contributions as an employer reflects a dedication to your employees' financial well-being. Offering education and resources on RRSP benefits and the advantages of making additional contributions promotes financial literacy and responsibility, ultimately boosting employee satisfaction, loyalty, and workplace morale.
In addition to lump sum contributions, the beginning of the year is also an excellent opportunity to remind your employees about your company-matched Retirement Savings Plan if you have one, so they can experience immediate tax savings with payroll deduction contributions throughout the year. Employees consider RRSPs and employer contributions as important factors when evaluating their employers, and group savings and retirement plans can help attract and retain top talent.
At Cowan, we offer Make Sense, a service that helps employees navigate the complexities of their retirement savings plan. Make Sense is complimentary, confidential, and available to all company retirement plan members, regardless of class or division. If your employees have questions about making a lump sum contribution, our team can help.
Watch the video below to learn more about this excellent service that can help your company stand out from the competition.