The false message hammered home from all the following sites is
1) The tax reduction on contribution is a benefit.
2) Growth within the plan is only tax deferred, not tax free. It is fully taxed on withdawal.
3) There is a benefit from the deferral of the tax on the original employment income.
4) Tax rates will be lower on withdrawal.
All those claims are false.
| The CANADIAN SECURITIES COURSE |
|---|
| Advantages of RRSPs |
| * a reduction in annual taxable income during high taxation years through annual tax-deductible contributions. |
| * accumulation of funds for retirement or some later time with the funds compounding earnings on a tax-free basis. |
| * deferment of some income taxes until later years when the holder is presumably in a lower tax bracket. |
Even Americans get this wrong. Betterment is a robo-advisor selling Asset Location as a customer benefit ... even after being advised of its error.
