RRSP
What is a A Registered Retirement Savings Plan (RRSP)
A Registered Retirement Savings Plan (RRSP) is a personal savings account registered with the Canadian government to help individuals accumulate capital on a tax-deferred basis for their retirement including tax deductions. The objective is to help individuals grow their savings in a tax free environment to secure an income during retirement years.
Who qualifies?
- Canadian residents
- Have a valid Social Insurance Number (SIN)
- Are 71 years of age or under
- Have an income and filed a Canadian tax return in the previous year
Advantages
There are various types of RRSP including: individual, spousal, group, and pooled RRSP each with its own benefits. Nevertheless, they all share one common advantage, and that is the tax benefits
Tax deductions
Reduce your taxable income with contributions.
Tax deferral
While in RRSP, your investments can grow on this a tax-deferred account
Income Splitting
The higher income-earning spouse can contribute in their spouse's RRSP.
Canadian government programs
Access funds in your RRSP to help buy your first home or pursue further education.
Contribution Limits
There is a contribution limit on RRSPs accounts, also known as a “deduction limit” which is the maximum amount you can contribute in a given year. To find out the exact amount, check on your most recent Notice of Assessment from the CRA.
As a guideline, your allowable RRSP contribution for the current year is the lower of:
- 18% of your earned income from the previous year
- The maximum annual contribution limit for the current tax year
- The remaining limit after any company sponsored pension plan contributions
| Year | Contribution Limit |
|---|---|
|
2022 |
$29,210 |
|
2021 |
$27,830 |
|
2020 |
$27,230 |
|
2019 |
$26,500 |
|
2018 |
$26,230 |
Source: Canada Revenue Agency
Not sure how much to save?
Contact a 3i Financial Advisor today to see how an RRSP can help your retirement planning and reach your retirement goals.