Retirement Savings Plan (RRSP)

What is a RRSP?

A Registered Retirement Savings Plan (RRSP) is a savings plan that is registered with the Canadian government that lets you save for your retirement.

The primary reason to contribute to an RRSP is to have another source of retirement income. When you contribute to your RRSP in your working years, you receive an immediate tax benefit as the contributions are tax deductible. Your retirement savings then grows tax-sheltered within the plan so your money grows faster. Then when you retire, you’ll have an income to draw on to supplement your other sources of income.

Who is eligible for an RRSP?

Any individual who is a Canadian resident, has earned income and files a 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

Below are the maximum annual RRSP contribution limits for the last seven years:

Year Contribution limit
2013 $23,820
2014 $24,270
2015 $24,930
2016 $25,370
2017 $26,010
2018 $26,230
2019 $26,500
2020 $27,230
2021 $27,830

Benefits of an RRSP

You 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 to buy your first home or pay for your or your spouse’s education, without penalty—providing it’s repaid within the specified time

What investment options are available for RRSPs?         
                                                                                                         
A WealthONE RRSP can hold a variety of investments, including your GICs and High-interests Savings deposits. A WealthONE representative can help you decide which investments will best serve your needs.