RRSP — Registered Retirement Savings Plan
Cut this year’s tax bill while your retirement savings compound tax-deferred.
An RRSP contribution does two things at once. It reduces your taxable income for the year, generating a refund at your marginal rate, and it shelters the investments inside from tax until you withdraw them in retirement — when your income, and therefore your tax rate, is usually lower.
Your contribution room is 18 percent of the previous year’s earned income, up to the annual maximum the CRA sets, plus any unused room carried forward. The RRSP also funds the Home Buyers’ Plan and the Lifelong Learning Plan, both of which let you borrow from yourself tax-free.
Who this is for
- Employees and self-employed people in a middle or high tax bracket
- Anyone with years of unused contribution room accumulated
- First-time home buyers planning to use the Home Buyers’ Plan
- Couples who could benefit from a spousal RRSP
What you get
Immediate tax deduction
Contributions reduce taxable income for the year, so a contribution in a high bracket delivers a substantial refund.
Tax-deferred compounding
No tax on interest, dividends or capital gains inside the plan. Decades of untaxed compounding is the real advantage.
Unused room carries forward
Room you do not use accumulates indefinitely. Your CRA notice of assessment shows exactly how much you have.
Spousal RRSPs
Contribute to a lower-income spouse’s plan, take the deduction yourself, and split retirement income more evenly later.
Home Buyers’ Plan
Withdraw from your RRSP tax-free toward a first home, then repay it over fifteen years.
Lifelong Learning Plan
Fund full-time education or training for yourself or your spouse with a tax-free withdrawal, repaid over ten years.
Questions we get asked
As a rule of thumb, the RRSP wins when your current tax rate is higher than the rate you expect in retirement; the TFSA wins when it is lower or when you may need the money sooner. Many people use both, and we will work through your actual brackets.
18 percent of last year’s earned income up to the CRA annual maximum, plus all unused room from previous years. The exact figure is printed on your latest notice of assessment.
You must convert the RRSP to a RRIF or an annuity by the end of the year you turn 71, and begin taking a minimum withdrawal each year after that.
There is a $2,000 lifetime buffer. Beyond that the CRA charges a penalty of one percent per month on the excess, so it is worth checking your room first.
Get a rrsp quote
Tell us a little about who needs covering. We will compare the market and come back with two or three options worth considering, with the trade-offs spelled out.
- Advice and paperwork cost you nothing
- Available in English, Punjabi and Hindi
- Most quotes returned the same business day