A Registered Retirement Savings Plan (RRSP) is a government-registered investment account designed to help Canadians save for retirement. Contributions are tax-deductible, and investment earnings are tax-deferred until withdrawal, making it a powerful tool for long-term financial planning.

What Is an RRSP?

An RRSP allows you or your spouse/common-law partner to contribute a portion of your income annually to a retirement savings account. Contributions reduce your taxable income, and all investment growth—including interest, dividends, and capital gains—is tax-deferred until withdrawn.

Key Benefits of an RRSP

• ✅ Tax Deduction: Contributions reduce your taxable income, potentially resulting in a lower tax bill or a refund.

• ✅ Tax-Deferred Growth: Your investments grow tax-free until you withdraw them.

• ✅ Flexible Investment Options: Choose from mutual funds, stocks, GICs, bonds, ETFs, and more.

• ✅ Spousal RRSPs: Split income in retirement and reduce your household’s overall tax burden.

• ✅ Retirement Readiness: Helps you prepare financially for retirement with disciplined savings.

Contribution Limits

Your annual RRSP contribution limit is based on 18% of your previous year’s earned income, up to a maximum set by the CRA. For 2025, the maximum contribution limit is $32,490. Unused contribution room carries forward to future years.

You can check your personal contribution limit in your CRA My Account or on your latest Notice of Assessment.

Withdrawing from an RRSP

Withdrawals are taxed as income in the year they are taken out, except under special programs like:

• Home Buyers’ Plan (HBP): Withdraw up to $35,000 tax-free to buy your first home (repayable over 15 years).

• Lifelong Learning Plan (LLP): Withdraw up to $10,000 per year (max $20,000) to finance full-time education (repayable over 10 years).

When Should You Open an RRSP?

• When you begin earning income

• When you want to reduce taxable income

• When you start saving for retirement

• When planning for a first home or continuing education

The earlier you start, the more you benefit from compound growth and tax savings.

RRSP vs TFSA: Which One Is Right for You?

While RRSPs offer tax-deferred growth and tax deductions, Tax-Free Savings Accounts (TFSAs) provide tax-free withdrawals. RRSPs are ideal for high earners saving for retirement, while TFSAs suit those who expect to be in a higher tax bracket in the future.

Tax Tips for RRSP Users

• Contribute before the RRSP deadline (usually March 1) to claim the deduction on the previous year’s tax return.

• Consider spousal contributions to reduce household tax liability.

• Reinvest your tax refund to boost future savings.

Plan Now, Retire Confidently

An RRSP is not just a savings tool—it’s your financial security for the future. Whether you’re starting your career or nearing retirement, maximizing your RRSP contributions can provide peace of mind and stability in your golden years.