What is an RRSP?
The RRSP (Registered Retirement Savings Plan; REER in French and in Quebec) is, according to the CRA, a retirement savings plan that you set up and that the CRA registers. You or your spouse or common-law partner can contribute to it.[1] Deductible contributions can lower your income tax, and what the investments inside the plan earn is generally exempt from tax while the money stays in it.[1]
- You contribute and deduct: what you deposit can be subtracted from your income, up to your deduction limit.[3]
- It grows tax-deferred: earnings are not taxed while the money stays in the plan.[1]
- You pay tax when you receive money: you generally pay tax when you withdraw or receive payments from the plan.[1]
Who can open one, and until when?
An RRSP is set up through a financial institution, such as a bank, credit union, trust or insurance company, and contributions are made directly to the plan’s issuer.[2] What the CRA says:
- There is no minimum age to start contributing, although the institution may set its own minimum age to open an account.[3]
- Maximum age to contribute: until December 31 of the year you turn 71. For your spouse’s or common-law partner’s RRSP, until December 31 of the year that person turns 71.[4][9]
- To deduct you need available deduction room: what you can deduct is limited to your RRSP deduction limit for the year, which the CRA calculates using your earned income.[3]
- Choose where to open itYour financial institution explains the types of RRSP and the investments they can hold.[2]
- Choose the typeIt can be a regular RRSP, a self-directed one (you make the investment decisions and the issuer handles the administration)[11] or one in your spouse’s or common-law partner’s name (spousal RRSP).[2]
- Decide what goes insideThat choice is what sets your return and your risk. Contribute directly to the plan’s issuer.[2]
How much can I contribute?
What you can deduct each year is your RRSP deduction limit: the maximum you can deduct for contributions to your RRSP (and to your spouse’s or common-law partner’s). It is based in part on your earned income in the previous year.[7]
For 2026 it is calculated from your 2025 earned income: 18% of that income, or the year’s dollar limit if that is lower.[6]
| Year | RRSP dollar limit |
|---|---|
| 2025 | $32,490 |
| 2026 | $33,810 |
| 2027 | $35,390 |
Your limit for the year is built like this:[6]
- the lesser of 18% of last year’s earned income and the year’s dollar limit
- − your pension adjustment (PA), if you have a workplace pension plan (shown in box 52 of your T4)
- + unused deduction room from previous years
Where do you find your limit? On your latest notice of assessment or reassessment, in your CRA account, by phone, or on Form T1028 if the CRA sends it to you. Future assessments may change the figure, so confirm it before you contribute.[8]
Deadline. Contributions made during the first 60 days of the following year can count toward the previous year.[3] For example, for the 2025 return, the deadline was March 2, 2026.[9] Contributions are deducted on line 20800 of your return.[10]
What can I hold inside?
Qualified investments are, in general, property other than real property:[11]
- Cash and savings accounts
- GICs (fixed-term deposits)
- Canada savings bonds and provincial savings bonds
- Mutual funds
- Most securities listed on a designated stock exchange
In a self-directed RRSP you decide what to buy and sell, and the issuer handles the administration; securities cannot be held in your own name.[11]
Benefits
- Deduction: deductible contributions can lower your income tax.[1] They are claimed on line 20800.[10]
- Tax-deferred growth: income earned inside the plan is generally exempt from tax while it stays there.[1]
- Room carries forward: what you do not use today is still available tomorrow.[6]
- Spousal RRSP: it can help split retirement income more evenly between the two of you.[2]
- Home Buyers’ Plan (HBP): lets you withdraw from your RRSP to buy or build a qualifying home; the current limit is $60,000.[18]
- Lifelong Learning Plan (LLP): lets you use RRSP funds for training or education for you or your spouse or common-law partner.[19]
The HBP and the LLP have their own eligibility and repayment rules: the HBP is repaid to the plan over a 15-year period and the LLP generally over 10 years. Whatever you do not repay on time is added to your income.[18][19][3] These special withdrawals are not included as income and have no tax withheld if you meet the conditions.[17]
Limits and common mistakes
| Limit | What it means |
|---|---|
| You pay tax when you withdraw | What you withdraw is generally taxable. You report it on line 12900 for the year you withdraw, using the T4RSP slip your institution issues.[13][14] |
| Withholding is not the final tax | When you withdraw, the institution withholds 10% up to $5,000, 20% from $5,001 to $15,000 and 30% over $15,000 (in Quebec: 5%, 10% and 15%, plus provincial tax). If you withdraw $10,000 outside Quebec, $2,000 is withheld. The CRA warns that the amount withheld may not cover the tax you owe at your tax bracket; the difference is settled when you file.[15] |
| Over-contributing | A buffer of $2,000 over your limit is allowed (only if you are 18 or older). Anything above that buffer is taxed at 1% per month. If your room is $5,000 and you contribute $8,500, the excess is $3,500; after the buffer, $1,500 remains and the tax is $15 per month. Withdrawing the excess before the end of the month it was made can avoid the tax on that amount.[12] |
| Deducting more than your limit | What you can deduct on your return is limited to your deduction limit for the year.[3] |
| Contributing after 71 | The last year to contribute to your own RRSP is the year you turn 71.[4] |
| Converting to a RRIF | If you transfer your RRSP to a RRIF, you must withdraw a minimum amount every year starting the year after, and those payments are taxable when received.[20] |
| Spousal RRSP and withdrawals | If you contributed to your spouse’s or common-law partner’s RRSP in the year of the withdrawal or in the two preceding years, you will probably have to include in your income what that person withdraws.[16] |
Withdrawals, transfers, spouses and death
Withdrawals. Except for locked-in plans, you can withdraw at any time, but you generally pay tax when you do.[13] Your issuer may withhold tax and gives you a T4RSP slip; the tax withheld is claimed on line 43700 of your return.[20][14]
Transfers. Moving funds directly from one RRSP to another is a transfer, not a withdrawal.[13] Amounts transferred directly to your RRSP generally do not affect your RRSP deduction limit.[21] So if you change institutions, ask for a direct transfer rather than withdrawing and re-depositing.
Spouse or common-law partner. A plan in your partner’s name follows an attribution rule: if you contributed that year or in the two years before they withdraw, the income can fall on you.[16]
Death. For an unmatured RRSP, the fair market value at the time of death is included in the annuitant’s income for the year of death. If all of the plan is paid to the named spouse or common-law partner and transferred directly to their RRSP, that amount is deductible, as long as the transfer is completed by the end of the year after the year of death. The amount reported can also be reduced when a financially dependent child or grandchild receives it.[22]
RRSP vs. TFSA, in brief
Both are registered accounts and they are not mutually exclusive. This table only compares their rules; it is not a recommendation for your case:
| RRSP | TFSA | |
|---|---|---|
| Contributions | Deductible from your income up to your limit.[1] | Not deductible.[23] |
| Growth | Exempt from tax while it stays in the plan.[1] | Tax-free.[23] |
| Withdrawals | Generally taxable.[13] | Tax-free.[23] |
| 2026 limit | 18% of last year’s earned income, up to $33,810.[6][5] | $7,000 for everyone.[24] |
| Unused room | Carries forward.[6] | Carries forward.[24] |
Three examples
The essentials in 5 ideas
- An RRSP is a registered retirement account: you contribute, deduct, and it grows tax-deferred.
- You can contribute until December 31 of the year you turn 71.
- Your new room is 18% of last year’s earned income, up to $33,810 in 2026; unused room carries forward.
- What you withdraw is taxable, and withholding is not the final tax. Over-contributing costs 1% a month on the excess above the $2,000 buffer.
- To change institutions, use a direct transfer, not a withdrawal.
Test yourself
Eight quick questions. Pick an answer and you will see the explanation.
1. What is the RRSP dollar limit for 2026?
The CRA lists $33,810 for 2026. $32,490 was the 2025 limit and $35,390 is the 2027 limit.
2. Your 2025 earned income was $50,000 and you have no pension plan. How much new room do you have in 2026?
18% of $50,000 is $9,000, which is less than the $33,810 limit.
3. Until when can you contribute to your own RRSP?
The year you turn 71 is the last year you can contribute to your own RRSP.
4. You contribute in February. Can that contribution count toward the previous year?
Contributions made in the first 60 days of the following year can count toward the previous year. For the 2025 return, the deadline was March 2, 2026.
5. Your room is $5,000 and you contribute $8,500. With the $2,000 buffer, how much monthly tax do you pay?
The excess is $3,500; after the buffer, $1,500 remains, and 1% is $15 per month. Withdrawing it in time avoids the tax.
6. You withdraw $10,000 from your RRSP outside Quebec. How much does the institution withhold?
Between $5,001 and $15,000 the withholding is 20%: $2,000. It is a withholding, not the final tax.
7. Which account lets you deduct contributions from your income?
Deductible RRSP contributions can lower your tax; TFSA contributions are not deductible.
8. The holder of an unmatured RRSP dies, with no spouse or dependent children. What happens for tax purposes?
The fair market value is included in the annuitant’s income for the year of death, except for certain transfers to a spouse or dependent children.