It is a government-approved, tax-advantaged retirement savings account in Canada.

Who Can Open an RRSP?

Anyone who is a tax resident of Canada, has a valid Social Insurance Number (SIN), earns income, and files an income tax return in Canada is eligible to open an RRSP.

What is the maximum amount you can contribute to an RRSP in a year?

The maximum RRSP contribution for the current year is calculated as a percentage of your previous year’s earned income (typically up to 18%) and is capped at the annual limit set by the federal government for that year.

What happens if you contribute more than your RRSP limit?

If you contribute more than your allowable RRSP limit (beyond the small permitted buffer), the excess amount will be subject to a penalty of 1% per month until it is corrected or withdrawn.

When is the RRSP contribution deadline?

To have your contribution count toward the previous tax year, the deadline is typically in early March of the following year.

What are the consequences of withdrawing from your RRSP during the year?

Withdrawing funds before retirement is subject to withholding tax at the time of withdrawal, and you also lose part of your long-term savings potential — because the amount you withdraw does not get added back to your RRSP contribution room.

When can you no longer contribute to an RRSP?

You can no longer contribute to an RRSP after December 31 of the year in which you turn 71.

Are investment earnings inside an RRSP taxable?

Investment earnings—such as dividends, interest, and capital gains—are tax-sheltered inside the RRSP and are not taxed until the funds are withdrawn.

Can an RRSP be transferred to another person?

No. You cannot transfer your RRSP contribution room or ownership of your RRSP to another person.

If I’m unable to contribute the full amount in a given year, can I make it up later?

Yes. Any unused RRSP contribution room can be carried forward to future years.

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What is an RRSP?

A Registered Retirement Savings Plan (RRSP) is a government-registered investment account in Canada designed to help individuals save for retirement. In addition to providing opportunities for long-term investment growth, an RRSP offers valuable tax advantages—such as tax deductions on contributions and tax-deferred growth on investment earnings until the time of withdrawal.

How does it work?

Contributions you make to your RRSP are deducted from your taxable income for that year, which helps reduce the amount of tax you owe.
Investments inside the RRSP—such as dividends, interest, or capital gains—grow tax-deferred and are not taxed until they are withdrawn. When you take money out of your RRSP, the withdrawn amount is considered taxable income for that year.

Who is eligible to open an RRSP?

Anyone who earns employment or self-employment income in Canada and files a tax return is eligible to open an RRSP. There is no minimum age requirement to start an RRSP, but most individuals begin contributing during their working years. You can continue to hold and contribute to an RRSP until December 31 of the year in which you turn 71.

Benefits — Why Consider an RRSP?

Tax Reduction for the Current Year:
Your RRSP contributions are deducted from your taxable income, lowering the amount of tax you owe.

Tax-Deferred Growth:
Investment earnings inside the RRSP remain tax-sheltered until they are withdrawn.

Purposeful Retirement Savings:
Because of its tax structure, an RRSP provides strong incentives for long-term saving and helps you build a more secure retirement.

Special Programs:
Through the Home Buyers’ Plan (HBP) or the Lifelong Learning Plan (LLP), you can withdraw a portion of your RRSP funds tax-free to purchase your first home or finance eligible post-secondary education.

What is the contribution limit?

Your RRSP contribution room each year is based on a percentage of your earned income, up to an annual maximum set by the government. In addition, if you have not contributed the full allowable amount in previous years, any unused contribution room automatically carries forward and can be used in future years.

Key Points You Should Know

The RRSP contribution limit changes every year, so it’s important to review your personal contribution room regularly.

Your RRSP must be closed or converted into another retirement vehicle—such as a Registered Retirement Income Fund (RRIF) or an annuity—by December 31 of the year you turn 71.

Early withdrawals from an RRSP are subject to withholding tax at the time of withdrawal.

Is an RRSP right for me?

Who Might Benefit from an RRSP?

Individuals who are currently in a higher tax bracket and expect to be in a lower bracket during retirement.
Those who plan to use the Home Buyers’ Plan to purchase their first home or the Lifelong Learning Plan to pursue post-secondary education for themselves or their spouse.
Couples who want to reduce their overall household tax burden by using a Spousal RRSP to split retirement income.
Anyone seeking consistent savings, tax-deferred investment growth, and reduced taxable income today.

Who Might Not Find an RRSP Suitable?

Individuals who are currently in a low tax bracket and expect to be in a higher bracket in the future (a TFSA may be a better option for them).
Those who may need access to their funds in the short term, as early RRSP withdrawals are subject to withholding tax and potential tax implications.
People who do not have an emergency fund and may be forced to withdraw from their RRSP unexpectedly.
Individuals who anticipate having a high income even during retirement, which could reduce the tax advantages of RRSP withdrawals.
Those who prefer greater flexibility and fewer restrictions, as RRSPs come with specific rules and limitations.

Who Is RRSP Generally Suitable For?

Individuals who fall within a moderate tax bracket and are unsure whether their future tax rate will be higher or lower.
Those who want to use both an RRSP and a TFSA to balance today’s tax savings with future financial flexibility.
People who may need access to funds down the road but still want to allocate part of their income toward long-term retirement savings.
Individuals who are uncertain about when they might buy a home or pursue further education but want to keep the option of using the HBP or LLP in the future.