Registered Retirement Saving Plane

RRSPs offer tax-deferred savings. This means you won’t have to pay tax on your investments and any income earned on those investments until you start withdrawing funds.
Have Any Questions?

What is an RRSP?

An RRSP is a registered investment that lets you save for your retirement by deferring taxes on your investment earnings. This means more of your money can stay invested and grow faster.

An RRSP also helps you lower your tax bill today, by allowing you to deduct RRSP contributions from your taxable income. By the time you retire you will likely be in a lower tax bracket, so withdrawals are taxed at a lower rate than today.

How does an RRSP work?

Any contributions into your RRSP can help you decrease your current taxable income. This means you won’t have to pay taxes on your contributions or any investment growth until you withdraw funds.

For most Canadians, withdrawing from your RRSP at a later point in life – in your 60s or 70s – means paying much less tax.

Think of it this way: you’ll probably be in a much lower tax bracket when you’re retired in your 60s or 70s. So, you’ll be paying less tax when you withdraw from your RRSP at that age, all the while helping to lower your current tax bill.

Benefits why nearly half of Canadians invest in an RRSP

Use an RRSP to save for retirement while also saving for anything in a TFSA
Contributions reduce your annual income, lowering your tax bill

You don’t pay tax on the growth of your investments in your RRSP until you withdraw it so you can keep more of your money.

You can borrow money from your RRSP to go to school or buy your first home without penalty, provided it is repaid within the required time
You can make up for missed contribution room from previous years

Think of it this way: you’ll probably be in a much lower tax bracket when you’re retired in your 60s or 70s. So, you’ll be paying less tax when you withdraw from your RRSP at that age, all the while helping to lower your current tax bill.

Plus, you can hold a variety of investments in your RRSP, like:

  • stocks,
  • bonds,
  • segregated funds,
  • GICs, and
  • mutual funds,

What is your RRSP contribution limit?

Generally, your contribution limit is calculated by the Canada Revenue Agency based on these 3 factors:

  • Total of your unused deduction room from the previous year
  • Now add the smaller amount of:
  • - 18% of the earned income you reported on your tax return last year
  • - $27,830 (the annual limit for 2021)
  • Then subtract any pension adjustment from the previous year (if applicable)

What happens if you go over your RRSP limit?

You will be taxed 1% per month on any amount that is more than $2,000 over your contribution limit. If you don’t pay the additional tax within 90 days after the calendar year, you’ll face late-filing penalties or interest charged.

What are the RRSP contribution rules?

What are the RRSP contribution rules?

  • You can contribute until Dec. 31 of the year you turn 71 years old
  • You can contribute what you have available in your contribution room provided by the CRA

Frequently Asked Question (FAQ)

It depends how old you are when you retire. You must move your money out of your RRSP by December 31 of the year you turn 71. After that, you can convert your savings to another registered account like a registered retirement income fund (RRIF), purchase an annuity, or withdraw your funds. 
Depending on how your registered accounts are set up, they may be treated differently when you die.In general, at the time of death, the owner of the RRSP is deemed to have cashed out their RRSP assets.However, let's say you've named your spouse as the beneficiary of your RRSP. In this case, your RRSP can be rolled over to your spouse after your death. This roll-over would be tax-deferred, meaning your spouse won't have to pay taxes until they withdraw funds. Keep in mind that your spouse does not require additional RRSP contribution room when the rollover happens. Talk to a Sun Life advisor to learn more.
Your child will receive the full value of your RRSP funds. But the entire value of the RRSP will also be included as taxable income in the final tax return that will be filed when you die. Please note that generally, your estate is responsible for the associated tax liability. Speak to a lawyer or tax professional to better plan for your situation
There is no way to transfer your RRSP account to someone else. You also can’t transfer money from your RRSP to someone else’s RRSP.