What is an RRSP and how does it work in Canada?
An RRSP is a government-registered account that lets you save for retirement while reducing your taxes today. Contributions are tax-deductible, meaning they lower your taxable income in the year you contribute. Your investments grow tax-free inside the account. You pay tax only when you withdraw the money — ideally in retirement, when your income (and tax rate) is typically lower.
How do I open an RRSP account?
You can open an RRSP through a bank, credit union, insurance company, or online brokerage. You'll need a valid Social Insurance Number, Canadian residency, and your notice of assessment. Most providers let you open an account online in minutes.
What are the key benefits and contribution limits of an RRSP?
The main benefits are immediate tax relief, tax-sheltered growth, and flexibility in how you invest. For 2026, you can contribute up to 18% of your 2025 earned income or $33,810 — whichever is less — plus any unused contribution room from previous years. Unused room carries forward indefinitely.
RRSP rules and limits
Is my RRSP contribution limit the same every year, or does it change with income?
Your limit changes annually based on your prior year's earned income. The Canada Revenue Agency (CRA) also sets a dollar cap that rises with inflation: $31,560 in 2024, $32,490 in 2025, and $33,810 in 2026. Your actual limit is the lower of 18% of last year's earned income or the current dollar cap, plus any unused room.
What is the RRSP deadline for this tax year, and how is the limit calculated?
For the 2026 tax year, the contribution deadline is March 1, 2027. Contributions made in the first 60 days of a calendar year can be applied to the previous tax year. Your limit is calculated as 18% of your prior year's earned income or the annual dollar cap — whichever is less. The 2026 dollar cap is $33,810. You reach the 2026 cap only if you earned about $187,833 in 2025.
How will RRSP contribution limits affect my tax deductions this year and beyond?
Every dollar you contribute (up to your limit) reduces your taxable income for the year you claim it. You don't have to claim the deduction immediately — you can carry it forward to a year when your income is higher and the tax savings are greater. Unused contribution room also carries forward indefinitely, so skipping a year doesn't mean losing room.
How much should I have in an RRSP by a given age?
There's no single correct amount — it depends on your income, retirement goals, and other savings. Common benchmarks suggest having one year's salary saved by age 30 and three times your salary by age 40. Use these as rough guides, not strict rules. The most important factor is contributing consistently over time.
RRSP comparisons and transfers
How does an RRSP compare with a Tax-Free Savings Account (TFSA) or a workplace pension?
An RRSP gives you a tax deduction now and taxes withdrawals later. A TFSA works in reverse: you contribute after-tax dollars, but withdrawals are tax-free. A workplace pension is employer-sponsored and often includes matching contributions. Generally, an RRSP suits higher earners who expect a lower tax rate in retirement. A TFSA suits those who expect a similar or higher rate later — or who want flexible, tax-free access. The 2026 TFSA annual limit is $7,000. For a fuller breakdown, see our TFSA FAQs.
What are the steps to transfer an RRSP to a TFSA, and are there penalties or limits?
You cannot transfer directly from an RRSP to a TFSA without tax consequences. You must withdraw from the RRSP first, which triggers income tax on the full amount. Then you can contribute the after-tax funds to your TFSA, subject to your available TFSA room. There is no penalty beyond the tax owed, but large withdrawals can push you into a higher tax bracket. Learn more about RRSP transfers for more detail.
How do I choose an RRSP provider or plan?
Compare fees, investment options, and account features. Look for low management fees, a range of investment choices (such as exchange-traded funds, mutual funds, or individual securities), and user-friendly account access. Consider whether you want a self-directed account or a managed portfolio. Check for any minimum balance requirements or transfer fees.
What is a group RRSP and how does it differ from an individual RRSP?
A group RRSP is set up by an employer for its employees. Contributions are typically deducted from your paycheque before tax, and some employers match a portion of your contributions. An individual RRSP is opened and managed by you alone. Both follow the same CRA contribution limits and tax rules. Group plans often have lower fees due to pooled assets, while individual plans offer more control over investment choices.
When must I close my RRSP, and what happens if I over-contribute?
You can contribute to an RRSP until December 31 of the year you turn 71. After that, you must convert it to a Registered Retirement Income Fund (RRIF), cash or an annuity. If you over-contribute, the CRA allows a $2,000 buffer — amounts above that incur a 1% penalty per month until corrected.
