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Registered Retirement Savings Plan (RRSP)
An RRSP is a savings plan that is registered with the federal government. It is designed to help you save for retirement by allowing your investments to grow tax-deferred, maximizing their potential over time.
What is an RRSP?
A Registered Retirement Savings Plan (RRSP) is one of the best ways to save for retirement.
Income from investments in an RRSP grows tax-deferred if the money remains within the plan. RRSP contributions are deductible from your taxable income, which may help you reduce your tax bill.
Benefits of RRSPs
How does an RRSP work?
- You can hold a variety of investments within an RRSP, some include guaranteed investment certificates (GICs), and mutual funds. The investment income in the RRSP is tax deferred until you withdraw the funds.
- For the 2024 tax year, the RRSP contribution limit is $31,560 or 18% of your 2023 earned income, whichever is lower, plus previous unused contribution room less any pension adjustments.
- The RRSP contribution deadline for the 2024 tax year is March 3, 2025.
Important numbers to know
Alternative ways to use the funds in an RRSP
An RRSP provides you with some options to use your savings. For example, you can withdraw money from your own RRSP tax-free to go back to school or for a down payment on your first home. However, you are required to pay the money back into your RRSP in both instances, and you do lose out on the growth potential of your investments during that time period. There are conditions and eligibility requirements to these options.
RRSP Investment Options
There are a variety of eligible investments you can hold in your RRSP.
These investments may include:
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Guaranteed Investment Certificates (GICs): A GIC is a secure way to grow your money since it offers 100% principal protection with the potential for a return on your investment.
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Mutual Funds: A Mutual Fund is an investment that pools the money of many investors and uses it to buy stocks, bonds and other assets. Mutual Funds are professionally managed to help keep your investments on track to meet your long-term goals.
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Cash: Holding cash in your RRSP is like keeping your money in a bank account or high-interest savings account. Cash is the most secure type of investment, but it doesn’t offer the growth potential of mutual funds. People sometimes “park” their money in cash until they are ready to invest in a longer-term option.
Choose from a range of RRSP options at TD, to help meet your retirement goals. See What TD Offers.
Calculators and Tools
Frequently Asked Questions about RRSP
If you miss the deadline, you’ll have the chance to make up for it the following year, as unused RRSP contribution room is carried forward indefinitely. However, you will miss out on the current year tax deduction and the growth potential of your investments in your RRSP.
You can make a withdrawal from your RRSP at any time. However, the amounts you withdraw is considered taxable income and is subject to withholding tax.
There are two programs that allow you to make tax-free RRSP withdrawals that are not included in your taxable income: The Home Buyers’ Plan and the Lifelong Learning Plan
Your RRSP contribution limit is the amount you are able to contribute to your RRSP in any given year. It is the lower of 18% of your earned income or the yearly maximum, which for 2024 is $31,560, and subject to other adjustments. Any amounts you do not contribute builds your RRSP contribution room and can be carried forward indefinitely. Your most recent Notice of Assessment from the CRA will list your available RRSP contribution room.
When you overcontribute to your RRSP by more than $2,000, you have to pay a penalty of 1% per month for every month that you’re over your limit, until withdrawn.
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