Question 1

What is an RRSP?

Accepted Answer

A Registered Retirement Savings Plan (RRSP) is a Canadian government-registered account that lets you save for retirement with a powerful tax advantage: contributions are deductible from your taxable income, and all investment growth inside the account is sheltered from tax until withdrawal. It was introduced by the federal government in 1957 to encourage personal retirement savings.

Question 2

How much can I contribute to my RRSP in 2026?

Accepted Answer

The 2026 RRSP contribution limit is $33,810 or 18% of your 2025 earned income — whichever is lower. Unused room carries forward indefinitely. You can find your exact limit on your 2025 Notice of Assessment from CRA or through My CRA Account online. The deadline for contributions counting toward the 2026 tax year is 60 days after year-end (around March 1–2, 2027).

Question 3

How does the RRSP tax deduction work?

Accepted Answer

When you contribute to an RRSP, you deduct that amount from your taxable income on your tax return. The tax you recover equals your contribution multiplied by your marginal tax rate. If you contribute $10,000 and your marginal rate is 43%, you get back $4,300 as a refund. You can also carry forward the deduction to a future year when your income is higher.

Question 4

When should I withdraw from my RRSP?

Accepted Answer

RRSP withdrawals are taxed as income. The ideal time to withdraw is when your income is lower than during your working years — typically in retirement. Withdrawals before retirement are generally discouraged because you pay tax immediately and permanently lose that contribution room. Exceptions include the Home Buyers' Plan ($60,000 limit) and Lifelong Learning Plan ($20,000 limit).

Question 5

What is a spousal RRSP?

Accepted Answer

A spousal RRSP lets the higher-earning spouse contribute to a plan in the lower-earning spouse's name. The contributor gets the tax deduction, but the lower-earning spouse owns the funds and pays tax on withdrawals at their (lower) marginal rate. This income-splitting strategy is most effective when there's a significant income gap between partners, especially near retirement.

Question 6

What is the RRSP Home Buyers' Plan (HBP)?

Accepted Answer

The Home Buyers' Plan allows first-time home buyers to withdraw up to $60,000 from their RRSP tax-free to purchase or build a qualifying home. If buying with a spouse/partner, you can each withdraw $60,000 for a combined $120,000. You must repay the withdrawn amount over 15 years, starting the second year after withdrawal. Missing annual repayments adds the unpaid amount to your income.

Question 7

What is the RRSP Lifelong Learning Plan (LLP)?

Accepted Answer

The Lifelong Learning Plan allows you to withdraw up to $10,000 per year ($20,000 total) from your RRSP tax-free to fund full-time education or training for yourself or a spouse. You must repay the amount over 10 years — 1/10th per year. Unlike the HBP, the LLP cannot be used for children's education.

Question 8

What happens to my RRSP when I turn 71?

Accepted Answer

You must close your RRSP and convert it by December 31 of the year you turn 71. Most people convert to a RRIF (Registered Retirement Income Fund) or purchase an annuity. With a RRIF, you must withdraw a minimum percentage each year (starting at 5.28% at age 71 and increasing with age). These withdrawals are taxed as income.

Question 9

What is the RRSP over-contribution limit?

Accepted Answer

CRA allows a $2,000 lifetime over-contribution buffer before penalties apply. Contributions exceeding your room by more than $2,000 incur a 1% per month penalty on the excess. Always check your current contribution room before contributing — it's shown on your Notice of Assessment or in My CRA Account.

Question 10

Can I hold foreign investments in my RRSP?

Accepted Answer

Yes. Foreign content limits were eliminated in 2005. Your RRSP can hold any Canadian or foreign investment. You can hold US stocks, international ETFs, foreign bonds, and more. Note that US dividends paid inside an RRSP are exempt from the 15% US withholding tax under the Canada-US tax treaty — a significant advantage over holding them in a TFSA.

Question 11

How does RRSP affect OAS and GIS in retirement?

Accepted Answer

RRSP withdrawals (and RRIF minimum payments) count as income in retirement, which can trigger OAS clawback (starting at ~$91,000 net income in 2025), reduce GIS (Guaranteed Income Supplement) entitlement, and affect income-tested credits. To mitigate this, consider melting down RRSP assets gradually before CPP and OAS begin, or splitting income with a spouse via spousal RRSP.

Question 12

Should I contribute to RRSP or TFSA first?

Accepted Answer

Generally, RRSP wins if your current marginal rate is significantly higher than your expected retirement rate. TFSA wins if you're in a low bracket now, expect high retirement income (OAS/CPP clawback risk), or need flexibility to withdraw without income impact. For most middle-income earners ($50,000–$100,000), a split approach or employer-match RRSP first is optimal.

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