RRSP — Registered Retirement Savings Plan (Canada)
The RRSP (Registered Retirement Savings Plan) is a Canadian investment account allowing you to deduct contributions from taxable income. Gains grow tax-sheltered inside. Withdrawals are taxed as ordinary income.
RRSP Characteristics
- 2026 limit: 18% of 2025 earned income, max $32,490
- Tax deduction on contributions (30-50% savings depending on marginal rate)
- Tax-sheltered growth (interest, dividends, gains)
- Withdrawals taxable at day's marginal rate
- Mandatory conversion to RRIF before age 71
- Unused room carries forward indefinitely
Special programs
- HBP (Home Buyers' Plan): tax-free withdrawal up to $60,000 for first home, repayable over 15 years
- LLP (Lifelong Learning Plan): withdrawal up to $20,000 for education
RRSP Strategies
- Contribute at high rate, withdraw at low rate: ideally, your marginal rate at contribution > rate at retirement
- Spousal: spousal RRSP allows income splitting in retirement
- Maximize before year-end: you have 60 days after Dec 31 to contribute to prior year
Frequently Asked Questions
What's the 2026 RRSP limit?
18% of your 2025 earned income, max $32,490. Check your CRA Notice of Assessment.
Is RRSP withdrawal taxed?
Yes, at day's marginal rate. Except HBP and LLP (repayable, not taxed).
What happens at age 71?
Mandatory conversion to RRIF (or annuity). RRIF requires minimum annual withdrawals by age.
Can I have RRSP and TFSA?
Yes. Many have both: RRSP for immediate deduction, TFSA for flexibility.
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