Registered retirement savings plan
To help Canadians save for retirement, the federal government makes tax allowances for those who contribute to registered plans. With benefits of tax deductibility and tax-deferred growth, your registered retirement savings plan (RRSP) is one of the most effective ways to save for retirement.
Each year, Canadians may contribute up to 18% of their income, to a certain maximum. If you don't contribute the maximum amount, you may accumulate the leftover room. Once contributed, the money becomes registered.
Depending on how much contribution room you have and what makes sense for you, there are several options that can help you maximize your contribution. If you haven't started to contribute to an RRSP, or if you do so inconsistently, consider investing now. Having adequate financial resources in retirement is key to living the retirement lifestyle you envision.
Since you receive tax benefits from contributing to an RRSP, there are restrictions on withdrawals. To deregister or withdraw funds, you must pay tax, and any administrative fee or other fees associated with the investments.
However, in 2 instances you may withdraw funds without taxes:
- Home Buyers' Plan – allows you to withdraw up to $25,000 from RRSPs to buy or build a qualifying home for yourself (as a first-time home buyer).
- Lifelong Learning Plan – allows you to withdraw money from RRSPs to finance training or education for you or your spouse or common-law partner (not a child's education).
Under the rules governing registered retirement savings plans (RRSPs), you must collapse these plans by the last day of the year in which you turn an age set by legislation (currently age 71). We give you a number of income options.
