Myth 2: RRSPs aren\u2019t worth it because withdrawals are fully taxed, whereas in non-registered accounts, only income and gains are taxed. <\/strong>A common complaint is that RRSP withdrawals are fully taxed at marginal rates, whereas non-registered accounts only tax income and gains (with favourable tax treatment for dividends and capital gains). While it\u2019s true that RRSP withdrawals (usually from a Registered Retirement Income Fund (RRIF)) are taxed as income, what\u2019s often forgotten is the initial tax deduction at contribution. Remember: a $30,000 RRSP contribution is equivalent to an after-tax contribution of $18,000 at a marginal tax rate of 40 percent. If your tax rate is the same at the time of contribution and withdrawal, you effectively receive a tax-free rate of return on your net after-tax RRSP contribution (chart). In many cases, even if your tax rate is higher at the time of withdrawal, you may be better off compared to a non-registered account due to the effect of tax-free compounding over long time periods.<\/p>\n <\/p>\n While the fair market value of the RRSP\/RRIF at death is generally included in the terminal tax return and taxed at marginal rates, there may be ways to mitigate the potential tax liability. This includes a tax-deferred rollover to a spouse or financially dependent (grand)child. Another way to manage the potential tax bill is to engage in a \u201cmeltdown strategy,\u201d making withdrawals earlier when your tax rate is lower than you expect in the future or at the year of death.<\/span><\/p>\n While many of us are unhappy about the high taxes we pay, one way to ease the burden is by fully using tax-advantaged accounts. Yet RRSP participation rates have declined over the past two decades, from 29.1 percent of taxpayers in 2000 to just 21.7 percent in 2022. The good news: high-income earners are more […]<\/p>\n","protected":false},"author":129,"featured_media":4034,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_oasis_is_in_workflow":0,"_oasis_original":0,"_oasis_task_priority":"","_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-3991","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"acf":[],"yoast_head":"\n![\"\"](\"https:\/\/advisor.wellington-altus.ca\/crescowealthmanagement\/wp-content\/uploads\/sites\/35\/2026\/01\/Screenshot-2026-01-13-101830.png\")
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