Registered Retirement Savings Plan (RRSP)
What is an RRSP?
An RRSP (Registered Retirement Savings Plan) in an investment account that helps you prepare for retirement by growing your money and sheltering it from taxes. For every dollar you place into an RRSP, you can take a deduction against that year’s income. Plus, you don’t pay any taxes on your retirement savings until you withdraw them.
In addition to saving for retirement, you can borrow from your RRSP to help you afford your first home or to pay for education or training.
Benefits of an RRSP
Tax benefits
Contributions are tax-deductible and you don’t pay tax on any interest, dividends, or capital gains your investments earn.
Flexible contributions
You can carry over any unused contribution room, so it’s easy to strategically contribute more or less depending on your income.
Customized savings
Build an RRSP that fits your goals from a wide range of investment and savings options – including GICs, bonds, and ETFs.
Open an RRSP
Quick tip: If you're already a Member, you can open an RRSP through Online Banking. On your accounts page, just select "Add Investments" and choose "RRSPs". Sign in and get started.
Featured RRSP options
18-Month GIC
Perfect for shorter-term savings, this GIC is a great way to start building your RRSP.
High Interest Savings
A full-service savings account with a great rate to help your money grow faster.
3-year Raise the Rate GIC
A great long-term investment with the option to raise your rate, giving you more control over your savings.
Meet with an advisor
Want to chat with an advisor about building an RRSP that fits your retirement plans? Start the conversation – find a branch and book a meeting.
Contribution rules
Maximum contribution
18% of your annual income. For 2020, the contribution limit is $27,230. For 2021, the contribution limit is $27,830.
Who can contribute
Canadian residents under the age of 71 with employment income and a tax return can contribute to an RRSP.
Unused contribution room
If you have unused contribution room at the end of the year you can carry it over and use it next year.
Withdrawal rules
There are tax consequences to withdrawing from your RRSP before you retire, so try to avoid it. If you withdraw early, the money you take out will be subject to a withholding tax and it’s counted as part of your income for that year (meaning you pay income tax on it). There are a couple exceptions. You can borrow from your RRSP to help pay for your first home under the federal Home Buyers' Plan. You can also use money from your RRSP to pay for training or education as part of the federal Lifelong Learning Plan.
For 2020, the RRSP contribution limit is $27,230, or 18% of the income reported on your 2019 tax return - whichever is less. If you have contribution room carried over from previous years, you can also use that. To find your current contribution limit, check your last Notice of Assessment from the CRA or log in to your account on the CRA website.
It's often easier to make smaller, regular contributions than it is to come up with a larger lump sum. This is easy to do with a pre-authorized contribution plan (PAC). A PAC automatically withdraws as little as $25 from one of your other Meridian accounts and adds it to your RRSP. In the end though, you can contribute any way you want – just keep an eye on the contribution limit.
If you are a first time home buyer, you can borrow up to $35,000 from your RRSP to help pay for your new home as part of the federal Home Buyers' Plan. Your spouse or partner can do the same, which would give you a total of $70,000. You don’t have to pay tax on this withdrawal, but you do need to pay it back within 15 years.
If you have separated, divorced, or ended a common-law partnership, you can still take advantage of the Home Buyers' Plan, even if you have purchased a home before. You just need to meet these conditions:
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The separation had to take place within the previous four years, and you must be living apart for a minimum of 90 days.
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You cannot be living with a new spouse or common-law partner when you withdraw under the Home Buyers’ Plan.
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If you own a primary home at time of withdrawal, you must sell this principal residence no later than two years after the end of the year in which you make the withdrawal.
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If you own a home jointly with your ex-spouse, you can use the HBP to buy out your spouse (in this case you don’t need to sell the principal residence, and the existing rule that individuals may not acquire the home more than 30 days before making the withdrawal will also be waived).
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HBP balance must be $0 at time of withdrawal.
When you withdraw funds from your RRSP before retirement you pay a withholding tax on them (the amount will depend on where you live) and withdrawn funds also count as income, so they affect the income tax you pay as well. The two exceptions to this are withdrawals as part of the Home Buyers' Plan and Lifelong Learning Plan.
When you retire, you can convert the money in your RRSP into income by transferring it to a RRIF, purchasing an annuity, or cashing in your RRSP. You must withdraw all funds from your RRSP by the end of the year you turn 71.
If you exceed your maximum contribution for the year by $2,000 or less there’s no penalty but you don’t get a tax break on the excess amount. If you exceed your contribution limit by more than $2,000 you have to pay a penalty to the CRA of 1% per month on the excess amount for as long as it’s in your account.
Yes. Contributions to your RRSP give you a tax deduction. This means your taxable income is reduced, which lowers the amount of tax you pay.
With a spousal RRSP, one spouse (or common-law partner) is the owner of the account and one person is the contributor to the account. This is a great way to split income for tax purposes. For example, if you earn more than your spouse, you can split your RRSP contribution between your personal RRSP and a spousal RRSP. You still get the tax deduction, and you also help to grow your spouse’s retirement savings.
Mutual funds are offered through Credential Asset Management Inc. Mutual funds and other securities are offered through Credential Securities, a division of Credential Qtrade Securities Inc. Credential Securities is a registered mark owned by Aviso Wealth Inc.