RRSP Calculator

A Registered Retirement Savings Plan (RRSP) is a tax-deferred retirement account. Any money you contribute to an RRSP is not taxed until you retire. That means you could get a fat tax refund in the current year! The Canadian government created RRSPs specifically to provide tax breaks to those who invest money for retirement.

Unlike TFSAs (which you can use for any savings goal) a Registered Retirement Savings Plan (RRSP) is an investment account that you can only use for retirement savings. RRSPs offer immediate tax benefits. Any amount you contribute to an RRSP will be safe from income tax that same year. A TFSA is not a tax-deferred account. You can't deduct TFSA contributions from your income tax. Instead, TFSAs offer tax-free growth on your investments or savings over time. You can withdraw from a TFSA any time without paying tax. When you withdraw from a RRSP, you must pay a withholding tax of 5%-30% depending on where you live and how much you withdraw. While you can keep TFSAs for life, RRSPs need to be converted to another account by the last day of the year in which you celebrate your 71st birthday.

It depends on your savings goals and when you need to withdraw the money. RRSPs are useful for long term retirement savings. TFSAs are more beneficial for shorter-term savings goals. When you contribute to an RRSP, your cash is locked away until you retire. If you withdraw early, you have to pay withholding tax. You can take out money from a TFSA any time without paying tax on the withdrawal. If you think you’ll need access to your money before retirement—a TFSA is a good option. RRSPs are most beneficial to those in a high tax bracket now but will be in a lower tax bracket when they retire. The RRSP annual contribution ceiling is much higher than that of TFSAs. If you're maxing out your TFSA you could contribute additional savings to another tax-advantaged account like an RRSP. Learn more about RRSPs vs TFSAs here.

If you want to hang up your boots at some point, you'll need some money to live off in retirement. An RRSP is an excellent place to stash those retirement savings if you anticipate being in a lower tax bracket than when you were contributing. Contributions are tax-deductible, which means you can reduce the tax you pay now — avoiding tax on RRSP money until retirement is beneficial as many people will pay a lower rate of tax in retirement. It's also useful as the tax money that would otherwise be given to the government could also provide an investment return.

Another reason you might want to prioritize an RRSP? If you’re investing heavily in foreign stocks, especially U.S. ones. That’s because the Internal Revenue Service in the United States doesn’t recognize the TFSA as a retirement account. So you’ll have to pay non-resident withholding taxes on any income that flows from U.S. sources if you keep them in a TFSA. With an RRSP, that’s not the case.

A spousal/common-law RRSP can also reduce your combined tax burden. Since you can't withdraw RRSP savings until retirement without paying a withholding tax, you won't be tempted to lay a finger with your nest egg. The only exception is if you need money for a house or education: you can withdraw the money without paying tax on it, but it's basically a no-interest loan. The Lifelong Learning Plan (LLP) lets you take up to $20,000 tax-free out of your RRSP to pay for full or part-time education and training. However, keep in mind that any money you withdraw will have to eventually be paid back into your RRSP. The same goes for the Homebuyer’s Plan (HP), which lets you withdraw up to $25,000 tax-free to put towards the purchase of a new home.

Yes, it is possible to open a self-directed RRSP. When you open a self-directed RRSP, it can hold several different types of investments under one roof. Regular RRSPs limit you to holding one kind of investment such as ETFs; this is not the case with self-directed RRSPs. So what goes into a self-directed RRSP? Whatever so-called RRSP "qualified" investment your hearts desires. This could range from stocks to bonds or real estate. However, with a self-directed RRSP you or your investment provider may spend more time managing the investments in your portfolio. If you prefer the hands-off approach, you'll want to consider an RRSP that is managed on your behalf.

The amount you contribute, investment performance, and when you retire are some factors that affect the future value of your RRSP. Our RRSP calculator uses these inputs to estimate how much your RRSP could be worth in the future. Adjust your contributions or predicted investment performance to see the effect they have on your RRSP value.

Yes, our RRSP calculator will show you how much of a tax refund you’ll get by contributing to an RRSP. It will also calculate how much money you can contribute to an RRSP without going over the limit.

You can use our RRSP calculator or do the math yourself. To calculate your RRSP lifetime limit, add up each years' RRSP limit starting from the year you turned 18. To compute your remaining contribution room subtract the amount you've already contributed to your RRSP from your RRSP lifetime limit. That's what our RRSP calculator does. If you can't remember how much you've added and withdrawn over the years, you can find out on your CRA My Account.Remember, RRSP limits are cumulative; unused contributions carry forward to the next year. Any amount withdrawn can be re-contributed in the following years.

The CRA is pretty forgiving on these matters. First, you'll get a nice bit of cushion; any amount up to $2,000 over your cumulative contribution limit will be forgiven (though it won't be considered tax-deductible). If you exceed the cushion the CRA will begin to assess a penalty of 1 percent on that over-contribution. This will be charged monthly until you reduce your RRSP balance below your cumulative limit.

You can find this year’s RRSP deduction limit here.The amount may increase annually. Contributions to an RRSP reduce the amount of income tax individuals must pay each year, so the Canada Revenue Agency (CRA) sets an annual limit on the number of contributions each eligible taxpayer can make to RRSPs. The deduction limit refers to this year's limit rather than taking into account any unused contributions from previous years. The RRSP deduction limit has gone up over time.