Larry,
I'm not familiar with the details of RRSP accounts in Canada so any comments
here are general in nature and not taken as accounting advice per se.
If it is a retirement savings account you would treat it as an Asset.
Depending upon the conditions associated with withdrawal of funds from the
RRSP you would most likely classify it as either a long term fixed asset or
a current asset. For personal accounting this distinction is not as
important as in business accounting, but can be still useful. (You could
simply record eveything just under Assets if you wished and this met your
requirements).
If you can withdraw funds at any time at your discretion, then you would
normally classify it as a current asset otherwise as a fixed asset. If there
are rules about how much you can withdraw and how often in the future, you
could continue to classify it as a fixed asset when you gain ready access to
the funds at some future time. If the funds become freely available (on
retirement for example), you could reclassify it as a current asset at this
point in time. This simply requires having placeholder subaccounts for
Fixed Assets and Current Assets under your Assets top level account and
changing the parent account for your RRSP from Fixed Assets to Current
Assets for example. It will just change what heading it appears under on the
Balance Sheet
If you are paying into the RRSP yourself, you are not creating an expense
when you transfer the money even though it may actually go to whoever holds
and maintains the RRSP account (it may be your bank for example) as you
still retain ownership and the right to access the funds in the future.
You are in this case exchanging one asset (cash in your bank account) for
another asset (the increase in the balance of the RRSP), so there is no
expense component of the transaction. The basic transaction will be:
Debit
Credit
Asset:Bank:CheckAccount
xxxx
Asset:RRSP xxxx
If you select double line mode (Menu->View->Double Line) when you click on a
transactionof this type in an account register e.g. your RRSP account
Register you should lines corresponding to both of the above components.
Interest should be recorded as:
Debit
Credit
Asset:RRSP yyy
Income:InterestRRSP
yyy
Whether that interest is taxable or not under your local legislation will
determine whether you classify it under TaxableIncome or NonTaxableIncome.
When you withdraw funds from the RRSP to your bank account, the transaction
will be the same as the deposit above with a reversal of the debit and
credit entries,i.e.:
Debit
Credit
Asset:Bank:CheckAccount xxxx
Asset:RRSP
xxxx
Hope this helps with the recording of your RRSP. If your records are in
anyway critical (e.g. tax and legal implications) it would be advisable to
seek professional advice locally.
David Cousens
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David Cousens
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