Frequently asked questions about RRSPs (FAQ)

What is registered retirement savings Plan (RRSP)?

Registered Retirement Savings Plan (RRSP) is a special type of accounts holding savings and investments. Read more ...

What are the benefits of RRSP?

There are two major benefits. One is that the contributions you made are tax deferred. Your contributions are deducted from your income thus save tax now. And it is taxed when they are withdrawn from your RRSP in the future. The other benefit is that the income earned inside RRSP is sheltered from tax until it is withdrawn from your RRSP.

Who can contribute to a RRSP?

To contribute to a RRSP, you have to be a Canadian resident with a valid social insurance number (SIN). You also have to have RRSP contribution room and under the age limit for contributing to an RRSP. You have to file a tax return to report your earned income to create your RRSP contribution room.

How can I find out the maximum amount I can contribute to my RRSP?

To find out the maximum amount that you can contribute this year, check your notice of assessment (NOA) which you received from the Canada Revenue Agency (CRA) after filing your tax return last year to find the amount indicated in the "[Current year] RRSP Deduction Limit Statement" section. If you cannot find your NOA, contact a CRA tax office or visit the electronic services section of the Canada Revenue Agency site.

When is the deadline to contribute to my RRSP?

You can contribute to your RRSP any time as long as you have contribution room available. However, in order to claim a tax deduction for a given year, you must have contributed to your RRSP within the first 60 days of the following year at the latest.

Am I allowed to over-contribute to my RRSP?

Yes, you are allowed for a $2,000 lifetime without incurring any penalty. The over-contribution is not tax deductible. But income earned on the over-contribution is accumulated on a tax-sheltered basis.

Any over-contribution exceeding $2,000 will be subject to 1% per month tax until it is withdrawn from your RRSP.

How many RRSP account can I have?

You can open as many RRSPs as you want. But the total contribution should not exceed your deduction.

Is interest on RRSP loan tax deductible?

No, if you borrow money to contribute to your RRSPs, the interest on the loan is not tax deductible.

What type of investment can I have in my RRSPs?

Please click here for a list of qualified investments. There is a tax implication for holding non qualified investments in your RRSPs.

What happens if I cannot contribute my full allowable amount?

If you cannot contribute the maximum in a year, the unused room will be accumulated for your future contribution.

What happens if I have to take out money from my RRSP?

You can withdraw money from your RRSP whenever you want. But whatever you withdraw has to be added to your taxable income in the year. Your RRSP withdraws would be taxed at your marginal tax rate regardless what type of income. It is true even if you are withdrawing dividends and capital gains, which normally would be taxed at lower rate.

There are two special withdraw programs which allow you temporarily withdraw funds from your RRSP tax free: Home Buyers' Plan (HBP) and lifelong learning plan.

Is there an age limit for contributing to an RRSP?

Yes, there is an age limit. Read more ... 

What are my options when I have to close my RRSP?

There are three options 1) take the money in cash, 2) use the funds to buy an annuity, 3) transfer the holdings to a registered Retirement Income Fund (RRIF).

How to deal with the Home Buyers' Plan (HBP) or Lifelong Leaning Plan (LLP) balance when you emigrate?

You have to repay the balace or include the amount in your tax return for the year you emigrate read more ...

Additional information