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RRSP Rules and Contribution Limits

At RBC, we make it easy for you to open a Registered Retirement Savings Plan (RRSP) and help it grow. On top of being a savings tool for retirement, it also may help you lower your tax bill today, by allowing you to deduct contributions (up to your personal deduction limit) from your taxable income.

Below, we’ve rounded up the rules, contribution limits and other information you should know in one handy spot.*

RRSP Basics

How it works, who can open one and the investments you can hold.

RRSPs are designed to help you save for retirement:

  • The money you invest in your RRSP is tax-deductible (up to your personal deduction limit), and your investment earnings grow on a tax-deferred basis.
  • You can technically withdraw funds at any time. However, withdrawals are taxed as regular income in the year they are made, (except when made under the Homebuyer’s Plan or Lifelong Learning Plan programs).
  • When you retire, or no later than the end of the year in which you turn 71, you can start drawing your savings and supplement your retirement income by converting your RRSP to a Registered Retirement Income Fund (RRIF) or other income option. And since you will likely be in a lower tax bracket when you retire, you’ll likely pay less tax on the withdrawals than you would today.

Most Canadians are eligible to open an RRSP. To qualify, you must:

  • Be a Canadian resident with a Social Insurance Number (SIN)
  • Have earned income and file a tax return in Canada
  • Open and contribute to your plan no later than December 31 of the year you turn 71.

Like Tax Free Saving Accounts (TFSA) and other types of registered accounts, an RRSP can hold many types of investments2. For example, when you open an RRSP at RBC, you can invest in:

RRSPs and TFSAs differ a few ways—just keep in mind you can have both1Legal:

  • RRSP contributions are tax-deductible (up to your personal deduction limit) the year you make them, and your investments grow on a tax-deferred basis. Taxes are paid when you withdraw from your RRSP. While TFSA contributions are not tax-deductible, your investment earnings are never taxed, and you can withdraw from your plan at any time (depending on what you invested in) without ever paying tax.
  • You have to have earned income to be eligible for an RRSP; TFSA eligibility is based on your age (you need to be at least 18 or the age of majority in your province) and residency.
  • You can contribute to an RRSP until December 31 of the year you turn 71; in a TFSA, you can contribute as long as you want.

See how they stack up.

Types of RRSPs

Plan types and your options at RBC.

In general, there are three different types of RRSPs:

  • Individual RRSP: The money and tax advantages belong to the person who opens it.
  • Spousal RRSP: One spouse or common-law partner (usually the higher earner) contributes to the other spouse’s plan. The contributing spouse will have the tax advantage but the funds in the RRSP (no matter who contributes) belong to the receiving spouse.
  • Group RRSP (GRSP): A collection of individual RRSPs administered by an organization for its employees, who contribute directly from their payroll using pre-tax dollars.

You can open an individual or spousal RRSP with RBC. In addition, you can enjoy:

  • An RRSP with access to advice from an RBC advisor
  • A self-directed RRSP you can trade in at RBC Direct Investing
  • An RRSP where the pros manage your investments for you at RBC InvestEase

We also offer Group RRSPs for businesses.

RRSP Contributions and Withdrawals

Deduction limit, carry-forwards and early withdrawals.

The best way to know how much you can contribute for the current year (also known as your RRSP deduction limit) is to check your most recent Notice of Assessment from the CRA .

As a guideline, however, you can contribute (for the current year) the lower of:

  • 18% of your earned income from the previous year
  • $29,210, which is the maximum you can contribute in 2022
  • The remaining limit after any company-sponsored pension plan contributions
Important Information

To be eligible for an RRSP deduction in a specific tax year, you must make contributions during that calendar year, or up to 60 days into the following year.

You can contribute to your RRSP up until December 31 of the year you turn 71. At that point, you have to convert your plan to a Registered Retirement Income Fund (RRIF), use the funds to buy an annuity or cash out your RRSP (not recommended).

Fortunately, RRSP contribution room is cumulative, which means any unused room from previous years is added to your current contribution room—also known as your carry-forward amount. The amount is shown on your Notice of Assessment.

If you plan to max out your RRSP, keep a close eye on your contribution room. When you go beyond the maximum, it is considered an over-contribution.

  • You can go up to $2,000 over the contribution limit without penalty. However, you have to withdraw these contributions before any new contributions can be applied.
  • The CRA will charge a 1% tax per month on excess contributions that exceed your RRSP deduction limit by more than $2,000.

If you have a company-sponsored registered pension plan (RPP) or deferred profit-sharing plan (DPSP), your RRSP contribution limit will be reduced by the total value of the pension credits you earned for the year. This amount is referred to as a pension adjustment (PA) and is reported on the T4 slip that you receive from your employer.

Taking money out of your RRSP may not be a good idea because of the taxes you’ll have to pay (see below). However, there are two exceptions:

  • If you are buying or building your first home, the Home Buyers’ Plan lets you withdraw up to $35,000. You have 15 years to pay back the amount you took out, starting the second year after you buy (or build) your home.
  • With the Lifelong Learning Plan, you can borrow up to $10,000 a year from your RRSP ($20,000 maximum over four years) to go back to school full-time. Again, there are rules about eligibility, and how and when you’ll need to pay back this money.

RRSP Taxes and Fees

How RRSPs are taxed, plus details on transfers and fees.

RRSPs offer tax advantages that can help you stretch your retirement savings. Here’s a quick look at how each of the following is taxed:

  • Contributions: You can deduct RRSP contributions on your tax return (up to your deduction limit), which lowers your taxable income in the year you make the contribution.
  • Investment growth: Investment income and capital gains within an RRSP are not taxed until you take the money out, giving your savings the chance to grow faster.
  • Withdrawals: They’re considered taxable income and withholding taxes may apply (we’ll share more about that below), unless you’re borrowing under the Home Buyers’ Plan or Lifelong Learning Plan.

If you withdraw money from your RRSP early, you will have to pay withholding taxes on the withdrawal—as much as 30%:

  • The financial institution where you hold your RRSP must deduct the withholding tax and send it to the government on your behalf.
  • You’ll also have to include the withdrawal as income on your tax return at the end of the year, which could raise your tax bill.
  • You will not be able to re-contribute the amount you withdrew in the future.
Important Information

We recommend talking to an advisor before taking money from your RRSP early.

You can transfer RRSPs between financial institutions at any time without paying taxes on them. You can also move some or all of your money between eligible investments within your RRSP.

Important Information

There’s no limit on how many RRSPs you can have—but the total contribution room of all your accounts is the same as if you only had one.

At RBC, we don’t charge any account-related fees for RRSPs, with one exception—there’s a service fee if you transfer your RRSP outside of RBC. The fee is $150 at RBC Royal Bank, $135 at RBC InvestEase and $150 at RBC Direct Investing. The fee could change, but we’ll let you know at least 30 days before the changes go into effect.

Invest in an RRSP Today

Choose from the following options to open or contribute to an existing account:

Royal Bank of Canada and Royal Mutual Funds Inc. (RMFI) make no warranties, express or implied, as to the accuracy or completeness of the information contained herein.

Royal Bank of Canada and RMFI shall not be liable for any losses or damages arising from any errors or omissions in information contained in this calculator.

Financial planning and investment advice are provided by RMFI. RMFI, RBC Global Asset Management Inc., Royal Bank of Canada, Royal Trust Corporation of Canada and The Royal Trust Company are separate corporate entities which are affiliated. RMFI is licensed as a financial services firm in the province of Quebec.

RBC Direct Investing Inc. and Royal Bank of Canada are separate corporate entities which are affiliated. RBC Direct Investing Inc. is a wholly owned subsidiary of Royal Bank of Canada and is a Member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund. Royal Bank of Canada and certain of its issuers are related to RBC Direct Investing Inc. RBC Direct Investing Inc. does not provide investment advice or recommendations regarding the purchase or sale of any securities. Investors are responsible for their own investment decisions. RBC Direct Investing is a business name used by RBC Direct Investing Inc.

RBC InvestEase is a restricted portfolio manager providing access to model portfolios consisting of RBC iShares ETFs with each model portfolio holding up to 100% of RBC iShares ETFs. RBC iShares ETFs are comprised of RBC ETFs managed by RBC Global Asset Management Inc. (RBC GAM) and iShares ETFs managed by BlackRock Canada Limited (BlackRock Canada). RBC GAM and BlackRock Canada have entered into a strategic alliance to bring together their respective ETF products under the RBC iShares brand, and to offer a unified distribution support and service model for RBC iShares ETFs.

Other products and services may be offered by one or more separate corporate entities that are affiliated to RBC InvestEase Inc., including without limitation: Royal Bank of Canada, RBC Direct Investing Inc., RBC Dominion Securities Inc., RBC Global Asset Management Inc., Royal Trust Corporation of Canada and The Royal Trust Company. RBC InvestEase Inc. is a wholly-owned subsidiary of Royal Bank of Canada and uses the business name RBC InvestEase.

The services provided by RBC InvestEase are only available in Canada.

Information about the RRSP is based on what is currently available from the Canadian government and can be subject to change.
Subject to meeting the eligibility requirements of both accounts.
Assets in an RRSP must be Qualified Investments under the Income Tax Act. If the RRSP holds non-Qualified Investments, it could be subject to tax.
Real-time streaming quotes are available automatically to all clients for exchange listed equities, ETFs and most over-the-counter (OTC) securities. Real-time streaming quotes for options and grey market OTC securities are available to Active Traders and Royal Circle clients upon accepting the terms and conditions of all exchange agreements on the RBC Direct Investing online investing site.