What is one advantage in participating in a registered retirement savings plan?
A)you always pay taxes on these contributions during the year you contribute
B)you are allowed to contribute 50% of your income
C)time value of money does not apply
D)the amount you deposit can be used as a deduction on your income tax

Question

Quizplus · Accepted Answer

The advantage of participating in a registered retirement savings plan is that the amount you deposit can be used as a deduction on your income tax. This means that your taxable income will be lowered, resulting in potentially lower taxes owed. Option A is incorrect because contributions may be tax-deductible and taxes are only paid when you withdraw funds in retirement. Option B is incorrect because the contribution limit is dependent on various factors and is subject to change. Option C is incorrect because time value of money still applies in the sense that your contributions will grow tax-free over time.

What Is One Advantage in Participating in a Registered Retirement