Benefits of contributing to an RRSP
There are many benefits to having an RRSP as part of your investment and retirement savings strategy:
Pay less income tax now
Your annual contribution can be deducted from your gross income, reducing the amount of income tax you pay that year.
Defer tax on your investment income
The income you earn is sheltered from tax, allowing it to grow faster. By the time you retire and withdraw funds, you will likely be in a lower tax bracket.
You can borrow your own money
You can withdraw money from your RRSP to buy your first home or pay for your or your spouse’s education, without penalty, providing it’s repaid within the specified time.
RRSP vs. TFSA: what’s the difference?
TFSA |
RRSP |
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Flexible? |
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Product options: |
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Direct Contributions? |
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Tax Deduction? |
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Withdrawal Rules: |
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Contribution Limits: |
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Expiration? |
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Who is eligible for an RRSP?
Any individual who is a Canadian resident, has earned income, and files an income tax return in Canada can contribute to an RRSP until December 31 of the year they turn 71 years old.
How much can I contribute to an RRSP?
There are contribution limits on RRSPs. The exact amount you can contribute for the current year can be found on your most recent Notice of Assessment you received from the CRA. As a guideline, your allowable RRSP contribution for the current year is the lower of:
- 18% of your earned income from the previous year
- The maximum annual contribution limit for the tax year
- The remaining limit after any company sponsored pension plan contributions
Maximum annual RRSP contribution limits for the last five years:
Year |
Contribution limit |
|---|---|
| 2020 | $27,230 |
| 2021 | $27,830 |
| 2022 | $29,210 |
| 2023 | $30,780 |
| 2024 | $31,560 |
When does an RRSP mature?
An RRSP must mature by the end of the year in which the annuitant turns 71 years of age.
For a WealthONE RRSP Plan, we will contact customers in January of the year they turn 71 to confirm what they wish to do with the proceeds. Options are:
- Withdraw from the plan,
- Transfer to a Registered Retirement Income Fund (RRIF) with an issuing institution. You can initiate the transfer through the receiving financial institution.
We’re here to help
What to put in your RRSP
Talk to one of our representatives to learn how a WealthONE RRSP can hold a variety of investments, including:
Investing
The Advantages of Tax Free Savings Accounts (TFSAs)
A TFSA is a registered savings account you can use to save for a major purchase or a goal. Your earnings and withdrawals are tax-free, so your money grows faster!
Retirement Planner
Our Retirement Planner Calculator determines the amount of savings that you'll need to retire comfortably. By flagging any shortfalls or surpluses, the Calculator outlines the savings required to reach your financial goals for retirement.
These calculators are made available to you as tools for independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy. All examples are hypothetical and are for illustrative purposes only.
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