Key RRSP Facts
Tax Advantages
Contributions to your RRSP are tax-deductible, reducing your taxable income for the year
Investment earnings within the RRSP grow tax-free until withdrawn
Contribution Limits
Your RRSP contribution room is based on 18% of your earned income from the previous year, up to an annual limit set by the CRA
Unused contribution room carries forward to future years
Important Deadlines
Annual Contribution Deadline
Contributions made by March 1 of the current year can be applied to the previous tax year
Example: The deadline to contribute for the 2024 tax year is March 1, 2025
Final Contribution Deadline
December 31 of the year you turn 71 years old is the last day you can contribute to your own RRSP
After this, your RRSP must be converted into a Registered Retirement Income Fund (RRIF) or annuity
Why Contribute to an RRSP?
Immediate Tax Savings
Contributions lower your taxable income, which can lead to a smaller tax bill or a larger refund
Long-Term Growth
Investments grow tax-deferred, allowing your money to compound more effectively
Retirement Income
Withdrawals made in retirement are typically taxed at a lower rate, as retirees often have less income
What Happens When You Turn 71?
You can no longer contribute to your RRSP after December 31 of the year you turn 71
Your RRSP must be converted into an income-generating option, such as:
A Registered Retirement Income Fund (RRIF)
An annuity
Lump-sum withdrawals, which are subject to tax
Why This Matters
Understanding how RRSPs work helps you maximize their benefits, save on taxes, and plan for a secure retirement.