Registered Retirement Savings Plan (RRSP)
The tax-deferral machine.
The Limit
Always check your CRA My Account for your exact personal limit. Over-contributing attracts penalties!
Quick Room Check
Check your CRA My Account for the exact total.
The Tax Vibe
Pre-Tax money goes in (tax refund!). Taxed as income when it comes out.
Best Used For...
- High income earners ($100k+)
- Saving for retirement
- Buying your first home (HBP)
Description
The RRSP lets you defer taxes until you are retired and (presumably) in a lower tax bracket. It also gives you a nice tax refund now, which you should ideally reinvest.
The Deduction vs. The Contribution
- Contribution: Putting money into the account.
- Deduction: Claiming that contribution to lower your taxable income.
- You can contribute now and wait to claim the deduction in a future year when you earn more money (higher tax bracket).
The Home Buyers' Plan (HBP)
You can borrow up to $60,000 from your RRSP tax-free to buy your first home. You must pay it back over 15 years.
The Deadline
You have until the first 60 days of the next year (usually Feb 29 or Mar 1) to contribute and claim it for the previous tax year.
Group Plans & Matching
If your employer offers an RRSP match, take it. It is literally free money. Usually, this is a Group RRSP.