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RRSP

Save for Retirement While Reducing Your Taxes

What is an RRSP?

A tax-advantaged account for retirement savings in Canada. Contributions are tax-deductible, and investment
growth is tax-deferred until withdrawal.

How It Works:

  • Annual contribution limits are based on income (18% of earned income, up to annual max)
  • Investments inside RRSP can include stocks, bonds, ETFs, mutual funds, and GICs
  • Withdrawals are taxed as income (except under Home Buyers' Plan or Lifelong Learning Plan)

Tips / Things to Watch For:

Maximize contributions each year for tax benefit

Understand withdrawal taxes and rules

Consider spousal RRSP to split income in retirement

Monitoring and Adaptation

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FAQs:

Can I withdraw early for a home purchase?

Yes, under the Home Buyers' Plan (HBP), tax-free, repayable over 15 years.

Are there penalties for over-contribution?

Yes, excess contributions are taxed; a small $2,000 over-contribution buffer exists.

Who It's For:

  • Canadians planning for retirement
  • Individuals looking to reduce current taxable income

Benefits:

  • Reduce current taxable income
  • Tax-deferred growth increases investment potential
  • Can complement employer pensions and other savings