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As part of our RRSP coverage, we asked Clay Gillespie, a Vancouver-based certified financial planner and chartered investment manager, to answer selected reader questions.

My wife and I recently withdrew funds from our RRSPs through the federal Home Buyers' program. When we start to pay back the money we withdrew, how do we differentiate those contributions versus regular contributions? Currently our RRSP contributions are deducted from our paycheques through our employer (direct deposit). – Mark

The Home Buyers' Plan (HBP) was designed to let first-time home buyers withdraw up to $25,000 from a registered retirement savings plan to buy a principal residence. This withdrawal is not taxed and must be paid back to your RRSP in 15 years.

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For example, a $25,000 HBP withdrawal from your RRSP requires a repayment of $1,667 every year for 15 years ($25,000/15 years = $1,667). Any missed repayments are included in your income for that year. You do have some repayment flexibility, however, as you are not required to repay the funds to the same RRSP or institution from which you made your withdrawal.

In your case, you are making RRSP contributions through a work-sponsored plan and will receive an RRSP contribution receipt for deposits made during 2012. If you had withdrawn $25,000 under the HBP, you could use $1,667 of that receipt to repay your HBP requirement and the remainder of the receipt could be applied against your RRSP contribution room.

You will receive a Home Buyers' Plan statement of account each year with your notice of assessment, allowing you to easily track your RRSP contribution room and the outstanding balance of your HBP withdrawal.

Clay Gillespie, a certified financial planner and chartered investment manager, is a financial adviser and managing director at Rogers Group Financial in Vancouver. The views expressed are those of the author and not necessarily those of Rogers Group Financial, which makes no representations as to their completeness or accuracy.

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