Canada: Registered Retirement Savings Plan (RRSP)

A Registered Retirement Savings Plan (RRSP) is Canada's primary tax-advantaged retirement account.

How it works

• Contributions are tax-deductible, reducing your taxable income for the year — a bigger benefit at higher tax brackets.
• Investments grow tax-deferred inside the account.
• Withdrawals are taxed as income, ideally in retirement when your rate is typically lower.

Contribution room

• You can contribute up to 18% of prior-year earned income, to an annual maximum, plus any unused room carried forward from past years.
• Check your personal limit (the CRA tracks it) before contributing.

Key features

• Hold funds, ETFs, stocks, and bonds inside it — it's a wrapper, not an investment itself.
• Home Buyers' Plan and Lifelong Learning Plan allow limited tax-free withdrawals for a first home or education, repaid over time.
• At retirement, an RRSP typically converts to a RRIF (or annuity) to provide income.

RRSP vs TFSA

The choice often hinges on your tax rate now vs in retirement. Many Canadians use both. See TFSA.

Key takeaway

The RRSP rewards contributions with an immediate tax deduction and decades of tax-deferred growth — ideal when you expect a lower tax rate in retirement. Capture any employer group-RRSP match first. Confirm current limits with the CRA.