Timely template letter: Use increased contribution limits to increase your client communication

(February 2003) The proposed changes to RRSP contribution limits announced in the February 18 budget are a clear indication that the government recognizes the increasingly important role RRSPs play in the financial well-being of Canadians. Show your clients you care by taking the time to explain this initiative to them using this customizable template letter:

Dear [Client’s name],

As you may have heard, the federal budget released on February 18th announced some important changes to RRSP contribution room limits. The changes will allow Canadian taxpayers to contribute 18% of their income to an RRSP, up to a new maximum of $14,500 for the 2003 tax year, then $15,500 in 2004, $16,500 in 2005 and $18,000 in 2006. From 2007, the maximum contribution will be indexed to inflation.

Even though these proposed changes really only affect those earning more than $75,000 per year, it’s clear that the government recognizes the increasingly important role RRSPs play in the financial well-being of Canadians, regardless of your annual income level. It would seem that, rather than telling people to rely exclusively on government programs like the Canada Pension Plan or Old Age Security, they are encouraging citizens to take retirement planning into their own hands through the increased use of RRSPs.

It’s especially important to remember that the value of RRSP contributions remains as stable as ever. You may be uncomfortable with the poor returns of the stock market, but please remember that it still makes good sense to contribute to your RRSP. Your RRSP is, after all, just a basket — you can hold any type of investment you choose, including more conservative investment vehicles like bonds and GICs. The important thing is to contribute regularly to properly fund your retirement goals.

[Optional: I know we have already met and solidified your 2002 contribution, but it’s never too early to think about this year’s contribution and the possibility of topping it up with the tax refund generated by your 2002 contribution.]

If you have any questions about RRSP contribution limits or any other changes introduced in the February 18 budget, I hope you won’t hesitate to give me a call.

Warmest regards,

[Your signature]

[Your name]

• • •

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02/26/03

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.