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A Registered Retirement Savings Plan (RRSP) is a plan that enables you to save money on a tax-deferred basis until you retire – a tax-efficient way to build your retirement savings.

Need to know

RRSP Contribution Deadline
  • March 1, 2019 – 11:59 PM (local time)
  • Contributions made during the first 60 days of 2019 can be applied against either the 2018 or 2019 taxation year
Contribution Limit
Eligibility
Age Limits
Lifelong Learning Plan (LLP)
Home Buyers' Plan (HBP)
Frequently Asked Questions

When is the RRSP contribution deadline?

The deadline falls 60 days after the end of the year. If that day falls on a weekend, the CRA may extend the deadline to Monday.

How much can I contribute to my RRSP?

You can contribute up to 18% of your earned income to a maximum of $26,500 in the 2019 tax year (minus pension adjustments from your company pension plan) in addition to unused contribution room from previous years.

How can I find out exactly how much I can contribute?

Your Notice of Assessment from the CRA will state your maximum contribution room for the current year. If you need to double check, call the CRA at 1-800-267-6999.

What is considered earned income?

Earned income includes salary, self-employment income, taxable maintenance and alimony payments, and net rental income. It does not include income from pensions or investments. Speak to your financial advisor about other types of income that may be eligible.

What if I dont contribute my maximum amount?

If you don’t contribute the maximum amount that you’re allowed, you can carry forward the unused portion indefinitely. Your Notice of Assessment shows your unused RRSP contribution room.

What if I contribute more than the limit?

Over-contributions are subject to penalty fees. Where over-contributions exceed $2,000, you will be assessed a 1% per month penalty tax until the excess is withdrawn or additional contribution room becomes available.

What investments can I include in my RRSP?

You can hold mutual funds, equities, bonds, cash and a variety of other investments in your registered plan. Speak to your advisor to ensure you do not own prohibited investments.

If my spouse and I decide to open a spousal RRSP, who makes the contributions?

The higher income earner normally makes the contributions on behalf of his or her spouse. The contributor, normally the higher income earner, would claim a tax deduction for the contribution, and withdrawals would be taxable to the lower income spouse (provided contributions were not made in the year of withdrawal or previous two years). Speak with your financial advisor for details and see page 9 of this brochure, “Are spousal RRSPs still useful?”.

Can I withdraw from my RRSP?

You can withdraw from your RRSP but the amount you withdraw is included in your income as fully taxable ordinary income. You will have to pay withholding tax when you withdraw (note: there are withdrawal restrictions if you have a locked-in RRSP). You might also have to pay additional tax on the withdrawal when you file your tax return for the year with credit for any withholding tax previously withheld.

The government offers two programs where you can withdraw money from your RRSP without tax provided the amounts are re-contributed to the RRSP over time. The Home Buyers’ Plan (HBP) lets a first-time homebuyer withdraw up to $25,000 for the purchase of a new home. The Lifelong Learning Plan (LLP) lets a student (or a spouse) withdraw $10,000 per year up to $20,000 to fund full-time education or retraining. Repayments under the HBP must occur over a 15-year period. Repayments under the LLP must occur over a 10-year period.

Can I reduce withholding tax by withdrawing $5,000 or less on separate occasions?

Generally, no. The federal government requires financial institutions to calculate, to the extent possible, withholding taxes on RRSP withdrawals on a cumulative basis. If you make five separate requests for withdrawals of $5,000 or less, each withdrawal may be subject to an escalating withholding tax to a maximum of 30% (31% for Quebec residents).

When does my RRSP mature?

You must wind up your RRSP by the end of the calendar year in which you reach age 71, typically by way of transfer to a Registered Retirement Income Fund (RRIF). However, you may convert to a RRIF at any time.

Don’t wait for your financial institution to tell you it’s time to convert. If you don’t choose a RRIF (or annuity) by the end of the year in which you turn 71, the financial institution that holds your RRSP could cash it in and send you the cash less any income taxes which must be withheld. If this happens the total value of your cashed-in RRSP will be added to your income for the year. It’s up to you and your financial advisor to avoid a big tax bill at the end of the year.

© Copyright 2018 Starlight Investments Capital LP. All Rights Reserved.

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