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Registered Retirement Savings Plans

Main Features

  • A registered retirement savings plan (RRSP) is a contract registered with the Canada Revenue Agency in which an investor invests for his/her retirement. The plan’s goal is to allow individuals to defer paying income tax until they withdraw funds from the plan.
  • You can deduct RRSP contributions from your annual income. The maximum RRSP contribution is 18% of your earned income from the previous year or $26,5001 (for 2019), whichever is less, minus any contributions to an employer pension plan.
  • You can contribute to your spouse’s RRSP so that your income is split at retirement. In such cases, the money accumulates in your spouse’s name but you enjoy the tax deductions.
  • If you cash in your RRSP before you retire, the amount you withdraw is added to your income the year you withdraw it. Funds withdrawn from an RRSP will be charged withholding taxes based on the amount withdrawn. This amount must be held back by the financial institution and remitted to the government on your behalf.
  • You must convert your RRSP into an annuity or RRIF by December 31 of the year you turn 71.
  • All these investments are RRSP eligible: guaranteed investment certificates, stock-indexed deposits, segregated funds, mutual funds, shares, bonds, and deferred annuities.

Major Advantages

  • In addition to being income tax deductible, your RRSP investment grows tax-free.
  • Unused contributions may be accumulated until December 31 of the year you turn 71.
  • You may temporarily withdraw a certain amount from an RRSP without paying income tax if you purchase a home under the Home Buyers’ Plan (HBP) or return to school under the Lifelong Learning Plan (LLP), if you meet the requirements of these programs.

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Attention: The above text is of general nature and is intended for explanatory purpose only. Each of the products described above has its own specific features. Moreover, only the product contracts contain the complete terms and conditions as well as restrictions and exclusions to which they are subject.

1Note: This does not include unused contribution amounts that are carried forward from previous years.