Are RRSPs a good idea for students?
RRSPs are great in that they help people pay less taxes and save for the future, but they’re not very useful for students. Students typically don’t make enough money to pay taxes, so when they put money into RRSPs they don’t get any taxes back at tax time. Some would argue that RRSPs are good for students because it gets them in the habit of saving for retirement or a future home purchase, which I agree but the lack of tax deferral is a real drawback.
What do I do if I’m a student and I have already put money into RRSPs?
If you have already put money into an RRSP plan ask your tax preparer to report the RRSP, but hold the deduction amount. This way you will be able to make the deduction in a future year when you are actually paying tax yet still have the RRSP investment generate income tax free