A Registered Retirement Savings Plan (RRSP) is a savings plan registered with the federal government of Canada so you can contribute to for retirement purposes. When you contribute to an RRSP, the contribution amount is deducted from your taxable income, and your funds receive a "tax benefit" that lowers your taxes. Any investment income earned on investments held by the RRSP prior to withdrawals can then be grown tax-deferred as long as the funds remain in the RRSP.

Depending on your preference, you can invest your contributions in a number of different growth investments, including stocks, bonds, Guaranteed Investment Certificates (GICs) and mutual funds, depending on the type of plan. Investment income earned on these investments is tax-deferred in the RRSP until it is withdrawn.

The amount you can contribute each year depends on the maximum contribution amount, which is the RRSP contribution or deduction limit. The 2021 RRSP contribution limit is 18% of 2020 income or $27,830 (whichever is lower), plus previously unused contributions, less pension adjustments.


What are the benefits of investing in an RRSP?

  • Tax-Deferred Savings
  • Tax Deductions
  • Optimizing Deductions
  • Income Splitting
  • Financing your First Home or Education

There is no minimum age requirement to open an RRSP. You can open an RRSP and make contributions at the end of the year in which you turn 71 as long as you are a resident of Canada, earn income, and file taxes.

Generally speaking, the earlier the age to open an RRSP, the better! It's never too early to start investing for retirement. In fact, depending on the type of investment product you hold, investing early may give you the benefit of tax-deferred compounding.

As long as your funds are not in a lock-in plan, you can withdraw your RRSP savings before you retire, but withdrawals are usually included in your income and taxed in the year of withdrawal. Starting at age 71, RRSP holders must withdraw all deposits in the account, and can choose to withdraw all their savings at one time, purchase a Life Annuity, or transfer the account to a Registered Retirement Income Fund (RRIF) account, etc.