The annual RRSP sales campaign now in progress normally culminates in a last-minute frenzy, as investors try to raise cash in time for the looming deadline. Since 2004 is a leap year and Feb. 29 falls on a Sunday, the contribution deadline this year is Monday, March 1, according to the Canada Customs and Revenue Agency.

The good news is contribution limits for registered retirement savings plans are on the rise for the first time in years. The bad news is that for many investors, coming up with the extra cash will become increasingly difficult the next three years.

As announced in last February's federal budget, the maximum contribution for the 2003 tax year was $14,500, rising to $15,500 for 2004, $16,500 for 2005 and $18,000 for 2006. After that the limits will be indexed by the growth in the average wage.

These maximums assume you currently make at least $86,111 and have no registered pension plan: the pension adjustment figure shown on T-4 slips shows how much pension plans will reduce your RRSP contribution room. They also assume your salary rises each year commensurate with the higher limits, which are based on 18% of the previous year's earned income.

Consider that to come up with $18,000 you'd have to put aside $1,500 per month. That's more than some Canadians earn.

There are two main types of RRSP investors: the rich, to whom such large sums are relatively trivial and almost a tax necessity; and average strapped wage-earner, for whom raising cash for any investment is a struggle.

If you're in the latter category, you have at least three options: set up a monthly pre-authorized chequing [PAC] account to spread your RRSP contributions across the whole year; borrow money to make your maximum contribution before Mar. 1; or transfer assets in kind from any non-registered savings.

It's easy to set up a PAC with a mutual fund dealer or a broker specializing in DRIP (dividend reinvestment plans) plans on individual stocks. You may even be able to get a form from the CCRA authorizing your employer to withhold less income tax from your paycheque -- in effect, providing your tax refund each payday and making it that much easier to put aside your regular RRSP installment.

That, of course, requires planning. If you're more of a last-minute type, start paying attention to the bank advertisements the next six weeks pitching last-minute RRSP "catch-up" or "top-up" loans. If a loan is the only way you can swing it and you can pay it off within the year, in part by using the tax refund, then strongly consider this route.

As for "in-kind" transfers from non-registered savings, make sure there are no tax consequences first, warns Warren Baldwin, regional vice president for T. E. Financial Consultants Ltd.

If you're well-heeled , odds are you're actually a year ahead of schedule in your RRSP contributions. That is, you probably made your 2003 contribution of $14,500 last January and are now about to contribute $15,500 for the 2004 tax year -- 14 months ahead of schedule.

This is another example of how the rich get richer. You'd be surprised how much faster your RRSP will grow if you're in a position to be one of these RRSP early birds. If on Jan. 1 [early in the new year] you invested $15,500 at 7% compounded yearly, after 20 years it would grow tax-free to $59,980, says Jamie Golombek, vice-president taxation and estate planning for AIM Trimark Investments.

By waiting until the absolute last minute (Mar. 1, 2005), the same investment would grow to only $55,428. Note that calculation is based on a one-time contribution. Those who regularly maximize contributions year after year at the earliest possible moment will see this effect greatly magnified: contributing the maximum as early as possible every year will generate $71,000 more than waiting until the last minute each year: $938,000 instead of $866,000.

Remember, both individuals invested the same amount of capital and got the identical 7% rate of return from the underlying investments. That $71,000 difference comes solely from always being 14 months ahead of the curve on your annual contributions. Golombek assumes the average wage grows 3% a year after 2006, in line with inflation.

If the investor is confident that RRSPs are best (and not facing punitive hidden taxation during retirement in the form of clawbacks), then contributing 14 months early always makes sense, agrees Talbot Stevens, a London-based financial educator.

Of course, financial markets won't necessarily yield 7% every year. You might argue early contributions could backfire if you invest in equities at the top of a bubble which subsequently collapses. In that case, latecomers may be in a position to scoop up bargains. But such considerations are an asset choice decision, Stevens says. Early birds who feel stocks are overvalued could still put their RRSP contribution in lower-yielding alternatives and reinvest in equities when values became more realistic.

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