Registered Retirement Savings Plan (RRSPs)

Video: Saving with Registered Plans

RSPs were designed for Canadians as an incentive to save for retirement during their working phase. 

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• The contributions are Tax-Deductible if contributed during a specific year or 60 days after year end. 
• You can carry forward unused contribution room to use in future years.
• Income earned inside the RSP account grows tax free and will only be taxed upon withdrawing from the account.
• When making RSP contributions, please consider any Pension Adjustment (PA) from the previous year 

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Advantages of RRSPs

• Provides growth of your retirement savings due to the compounding of tax-deferred income within the account as well as the deferral of tax on capital gains.
• Facilitates income splitting upon retirement when the couple, presumably, is at a lower tax bracket.
• Plan holders can borrow from the RRSP to fund the purchase of their first home through the
• Home Buyers' Plan. 
• Can be a source of additional funds if the need arises. In this case the withdrawals are taxed and remitted to CRA.​
• 10% tax withheld for withdrawals under   C$ 5,000​
• 20% tax withheld for withdrawals up to    C$15,000
• 30% tax withheld for withdrawals above   C$15,000
• Ask us about personalized strategies to optimize RRSP deductions, defer taxes and maximize income splitting opportunities for long term tax savings.
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Disadvantages of RRSPs

• The withdrawals are taxed as income.
• RRSP assets can-not be used as collateral.
• Upon passing the full RSP account becomes part of the Estate and is fully taxable.
• Assets in an RRSP account are not protected against creditor claims but under certain circumstances. 

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(Video Source:Financial Consumer Agency of Canada)

CONTRIBUTION LIMITS 

RRSP contribution limit is 18 percent of earned income to a maximum of:

 

2025  $ 32,810

2024 $ 31,560

2023 $ 30,780

2022 $ 29,210

2021 $ 27,830

2020 $ 27,230

2019 $ 26,500 

2018 $ 26,230

2017 $ 26,010

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- Unused Contribution room can be applied in subsequent years based on the income. It will help reduce your tax burden when you most need the deductions.

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CRA Notice of Assessment will contain your RRSP deduction limit for the following year.