Benefits of an RRSP
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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 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.
Save Faster with an Automatic Contribution Plan
Investing Regularly in an RRSP Pays Off
The chart shows how $50 contributed weekly, earning 6% interest, can grow to over $218,000 over 30 years.
Explore top RRSP questions.
- Individual RRSP: The most common type of RRSP is a plan registered in your name. The investments held in the plan and all the tax benefits belong to you.
- Spousal RRSP: When you contribute to a spousal RRSP, you still get the tax deduction but the plan is registered in your spouse's name. (Your spouse's contribution limit to his or her own plan is not affected.) It’s a great income-splitting option if one of you earns more than the other.
- Locked-in RRSP: If you leave your employer before you retire, you may be offer the option to manage your vested pension funds. A Lock-in RRSP—Locked-in Retirement Account (LIRA) in some provinces—enables you do this. As the name suggests, investments held in this plan type are locked in and generally, cannot be withdrawn before retirement.
Group RRSP: Some employers offer a Group RRSP, a collection of individual RRSPs for the company’s employees. As an employee, your RRSP contributions are taken from your pre-tax pay through payroll deductions, reducing your tax burden immediately.
Interested in taking the lead on your retirement savings strategy? Check out RRSPs at RBC Direct Investing for a wide range of investments and innovative tools to help you build your portfolio.
There are contribution limits on RRSPs. To find out the exact amount you can contribute for the current year, check the 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 Per Year|
While you can contribute to an RRSP at any time, 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.