# Article Argues RRSPs Not Right for Business Owners



## ThatJeffGuy (Apr 7, 2009)

Would be very interested to get the group's perspective on this article, which argues that RRSPs are not the right approach for people who own businesses. Does anyone have any experience with this dividends vs salary issue?

http://www.profitguide.com/prosper/...m_medium=email&utm_campaign=Profit_Newsletter


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## MoneyGal (Apr 24, 2009)

The answer is a resounding, "it depends." 

It depends on whether the business owner wants guaranteed income in retirement/is a conservative investor, it depends on how much money the business is making (and all of this assumes an incorporated business, not a partnership/sole proprietorship), it depends on how much money the owner is retaining/able to retain in the business, and it depends on some other considerations around the business structure and the owner's personal situation, needs and preferences. 

For every point in that article, a counterpoint could be made and, in fact, the very last para includes some counterarguments to the very points made in the article. It is inappropriate, in my view, to make sweeping statements such as [from the last para] "But for most business owners, RRSPs are not the right way to save for retirement."


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## MoneyGal (Apr 24, 2009)

Let me add this: I do think that RRSPs may *not* be the right choice, depending on the business owner's situation. And for many other people, splitting draws from a company into an optimal balance of salary + dividends allows them to get the benefits of each model (such as creditor protection for RRSPs, for example) while limiting the perceived downsides (i.e., limit salary withdrawals to limit CCP premiums to the maximum pensionable income). 

What business owners need to do, in my view, is to review options without having predetermined opinions ("most business owners should not use RRSPs to save for retirement") foisted upon them. :02.47-tranquillity:


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## Homerhomer (Oct 18, 2010)

What MG says, it depends.
I know at least one person who followed such a biased an inappropriate advice and was suprised that the couple couldn't claim child care expenses. Ouch, I guess business owners shouldn't have children ;-)


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## RBull (Jan 20, 2013)

It depends is clearly the right answer. As MG said the amount of profit and money available to the business owner is an important determinant on this as well.


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## carverman (Nov 8, 2010)

MoneyGal said:


> For every point in that article, a counterpoint could be made and, in fact, the very last para includes some counterarguments to the very points made in the article. I*t is inappropriate, in my view, to make sweeping statements *such as [from the last para] "But for most business owners, RRSPs are not the right way to save for retirement."


Agreed. The big issue for the retirement years is whether the business makes money and you can draw a salary from it,
and then sell it for at a market price which includes the goodwill..or the business fails for whatever reason. 

If the person owning the business does not have other sources of income and they have to depend on $12000, a year from the
combined gov't pensions, with costs going up, they will be in dire straits in their retirement years...unless of course they get lucky and win a lottery.


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