Registered Retirement Savings Plan · Canada

The RRSP, in plain language.

The RRSP is the original Canadian retirement account — and it's still the right answer when your income today is higher than it'll be in retirement. Your contribution comes off your taxable income dollar-for-dollar, which means the higher your tax bracket, the bigger the immediate refund.

Annual room formula

18%

of your prior year's earned income, capped at $33,810 (2026).

RRSP deadline

March 1

First 60 days of the following year. Contribute by March 1 for last year's deduction.

Maturity age

The RRSP must be converted to a RRIF, annuity, or cashed out by Dec 31 of the year you turn 71.

The mechanics

How RRSP room is generated.

Each year you file a tax return, CRA calculates 18% of your prior year's earned income up to an annual cap. Unused room carries forward forever — it never expires.

Earned income only

Employment, self-employment, and net rental income qualify. Investment income, capital gains, and pension income don't generate room.

Pension adjustment

If you're in a defined benefit or defined contribution pension plan at work, your RRSP room is reduced by the Pension Adjustment (PA) on your T4.

Age limit

Contributions stop on December 31 of the year you turn 71. After that, the RRSP must be converted to a RRIF or annuity.

Try it · The marginal-rate game

How contributions reduce your tax.

Move the income and contribution sliders to see how the RRSP refund changes. The higher your bracket, the more each dollar of contribution puts back in your pocket.

Your annual income $80,000

Employment, self-employment, or rental income before deductions.

RRSP contribution $10,000

Up to your available room (capped at $33,810 in 2026).

Expected retirement income $45,000

For comparing today's tax savings to your future withdrawal tax.

What this RRSP contribution does for you

Your marginal tax rate today 28%

Tax refund from contribution $2,820

Net cost of contribution $7,180

Marginal rate in retirement 20.06%

Permanent tax savings on this contribution $794

Today's $1 contributed becomes

Tax refund

$0.28

Out of pocket

$0.72

The core strategy

Contribute when your tax rate is high. Withdraw when it's lower. The difference is permanent tax savings — not just a deferral.

When the RRSP doesn't win

If your retirement income will be higher than your current income (e.g. you're early-career and expect a big career arc), the TFSA usually beats it.

Withdrawals

What happens when you take money out.

RRSP withdrawals are added to your taxable income in the year you take them. Your bank withholds tax at source. And critically — unlike the TFSA — withdrawn room is permanently lost.

TFSA withdrawal

Tax-free. Room is restored on January 1 of the following year. Take what you need.

RRSP withdrawal

Added to your taxable income. Withholding tax at source (10–30%). Room is gone forever.

Withholding rates: Up to $5,000 → 10% · $5,001–$15,000 → 20% · Over $15,000 → 30%. The actual tax owed depends on your marginal rate at year-end — the withholding is just an estimate.

Special programs

Home Buyers' Plan & Lifelong Learning Plan.

Two ways to use RRSP funds tax-free for big life moments — buying a first home or going back to school.

HBP · up to $60K

Home Buyers' Plan

First-time buyers can withdraw up to $60,000 ($120K per couple) tax-free. Repay over 15 years starting 2 years after withdrawal. Funds must sit in your RRSP for 90 days first. Form T1036.

LLP · $10K/yr

Lifelong Learning Plan

Withdraw up to $10,000/year ($20K total) tax-free to fund full-time education for yourself or your spouse. Repay over 10 years. Can be used multiple times once a prior LLP balance is fully repaid. Form RC96.

90-day rule

Plan ahead

Both programs require funds to have been in the RRSP for at least 90 days before withdrawal. Don't contribute and immediately withdraw — that contribution won't be deductible.

Income splitting · The 200K + 5K example

Spousal RRSPs & the attribution rule.

A spousal RRSP is one you contribute to, but your spouse owns. You take the deduction at your high tax rate. They withdraw later at their lower rate. The catch: the 3-year attribution rule — if your spouse withdraws within 3 calendar years of your last contribution, the withdrawal is taxed back to you.

Higher earner's income $200,000

Lower earner's income $5,000

Spousal contribution (high earner contributes) $20,000

Higher earner

Contributor · Year 1

Income$200,000

Marginal tax rate43.7%

Spousal RRSP contribution$20,000

Tax refund$8,740

Lower earner

Owner · withdraws after 3 yrs

Income$5,000

Marginal tax rate20.06%

RRSP withdrawal$20,000

Tax owed$2,107

Net family savings $6,633

Why this works: The high-earner spouse claims the deduction at their 43.7% bracket (saving real money today). The low-earner spouse withdraws later at a much lower bracket. The difference is permanent tax savings for the household — provided you wait three calendar years after the last contribution. Withdraw earlier and the income gets attributed back to the contributor.

At age 71

Your RRSP must be converted.

On December 31 of the year you turn 71, your RRSP matures. You choose one of three options — or the full balance is added to your income that year and taxed in one shot.

Convert to RRIF

The most common path. Annual minimum withdrawals begin at 72. Each withdrawal is taxed as income, but the rest keeps growing tax-deferred.

Purchase an annuity

Trade the balance for guaranteed income — for life or a fixed term. No further investment decisions, but no flexibility either.

Lump-sum withdrawal

Take it all out. Entire balance becomes taxable income that year — almost always the least tax-efficient option.

Keep exploring

Other registered accounts.

The RRSP rarely stands alone. Here's where to learn about the rest of the toolkit.

01 / TFSA

Ready when you are

RRSP, TFSA, or both?

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