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Registered Retirement Savings Plan (RRSP)


  • What’s an RRSP?
    A Registered Retirement Savings Plan (RRSP) is a great way to save for retirement. It offers two important tax benefits. Firstly, investment income in your RRSP isn’t taxed while in the plan , so it grows faster than it would otherwise. Secondly, contributions to your RRSP are tax deductible, so contributions can lower your taxable income and your income tax bill.It’s definitely a win-win way to invest for your future!
  • What is my RRSP contribution limit?
    The RRSP contribution limit for 2018 is $26,230, or 18% of the income reported on your 2017 tax return — whichever is less. Any unused contribution room from previous years is also carried forward, so it could be more. You’ll find your current RRSP contribution limit on your last Notice of Assessment from the CRA, or by logging into My Account on the CRA website.
  • Can I take money out of my RRSP before I retire?
    Sure you can! But depending on your situation you might want to avoid it. If you take money out of your RRSP before you retire, it’ll be subject to withholding tax, and counted as income for you in that year. There are exceptions though. You can borrow from your RRSP without penalty to finance your first home under the federal Home Buyers’ Plan (HBP), or to pay for full-time training or education as part of the Lifelong Learning Plan (LLP).
  • How much of my RRSP can I use to buy a house?
    You can borrow up to $25,000 from your RRSP to put toward a down payment on a new home, or to fund building one, under the federal Home Buyers’ Plan (HBP). Your spouse or partner can withdraw up to the same amount, for a combined total of up to $50,000. You won’t have to pay tax on this loan as long as you pay it back in full within 15 years.
  • How are RRSP withdrawals taxed before retirement?
    If you need to withdraw money from your RRSP before you retire (other than through the Home Buyers’ Plan or Lifelong Learning Plan), you’ll be charged a withholding tax. The rate of withholding tax depends on the amount you take out and the province you live in. The money you withdraw will be counted as income and will affect the income tax you pay for that year.
  • What’s the difference between a TFSA and an RRSP?
    Good question! There are a few differences between TFSAs and RRSPs. Think of the funds you put into an RRSP as pre-tax income: contributing to your RRSP can reduce your income tax for that year. You’ll pay taxes on that money when it comes back out of your RRSP or RRIF (with some exceptions), but typically your tax rate will be lower after you retire. Money that goes into your TFSA, on the other hand, is income that you’ve already paid tax on. It doesn’t change your income tax when it goes in or when it comes out. That also applies to the money your TFSA investments earn, which is 100% tax free.
  • What is a spousal RRSP?
    Simply put, a spousal RRSP is your spouse or common-law partner’s RRSP. There times when it may make sense to contribute to their RRSP in addition to your own. If you earn a lot more than your spouse or partner, contributing to their RRSP allows you to reduce your tax burden in retirement by splitting your incomes. Plus, if your spouse is younger, you can continue to contribute to their RRSP after you turn 71 and are no longer able to contribute to your own. Your tax professional or financial advisor can help you decide if and when spousal RRSP contributions might be a good idea.
  • What happens if I over-contribute to my RRSP?
    Don’t panic. If you’ve over-contributed to your RRSP by $2,000, there’s no penalty. You won’t get a tax break on over contributions , but you won’t be charged a penalty. Beyond that “cushion,” however, the penalty is 1% per month on the excess amount, which can add up fast.
  • How do I withdraw funds from an RRSP once I’ve retired?
    When it’s time to enjoy all of your hard-earned investment, (or by the end of the year you turn 71 at the latest) you may convert your RRSP to a Registered Retirement Income Fund (RRIF). In case of an RRIF, Then you can withdraw as much as you like, as often as you like — as long as it meets the annual minimum withdrawal amounts. For more information on RRIFs, check out our RRIF FAQs.
  • Will my withdrawals be taxed once I’ve retired?
    Yes, you’ll have to pay tax on the money you withdraw from your RRIF, so that’s important to keep in mind during retirement planning. But once you’ve retired, that tax rate might be lower than it would’ve been when you were putting the money into your RRSP.
  • Is investment income that my RRSP earns taxable?
    No, there’s no tax on investment earnings while they’re in your RRSP. Funds are taxed when they come out of your RRSP or RRIF.

Helpful Tools & Resources

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