Short Summary
An RRSP is a registered retirement savings account that allows Canadians to make tax-deductible contributions and grow investments on a tax-deferred basis. Withdrawals are taxable, and RRSPs must generally be converted to a RRIF or annuity by age 71.
FAQ
What is an RRSP?
An RRSP is a tax-deferred retirement savings account that allows contributions to reduce taxable income.
What is the 2026 RRSP contribution limit?
The maximum RRSP contribution limit for 2026 is:
$33,810
or
18% of 2025 earned income, whichever is lower.
Are RRSP contributions tax deductible?
Yes. Contributions generally reduce taxable income.
Are RRSP withdrawals taxable?
Yes. Withdrawals are included as taxable income.
Does withholding tax apply?
Yes.
Withdrawal Amount | Withholding Tax |
$0–$5,000 | 10% |
$5,001–$15,000 | 20% |
Over $15,000 | 30% |
Quebec rates differ.
Is withholding tax my final tax bill?
No. Actual tax liability depends on total annual income.
What is the Home Buyers' Plan (HBP)?
The HBP allows eligible individuals to withdraw up to:
$60,000 per individual
$120,000 combined for qualifying couples
for a qualifying home purchase.
What happens at age 71?
RRSPs generally must be:
Converted to a RRIF
Converted to an annuity
Withdrawn
Troubleshooting
My RRSP contribution room seems incorrect
Contribution room is calculated by CRA and appears on your Notice of Assessment.
I made a withdrawal and my contribution room did not return
Unlike a TFSA, RRSP contribution room is not restored after a withdrawal.
Why was tax withheld from my withdrawal?
CRA requires withholding tax on most RRSP withdrawals.
Concepts & Definitions
Tax Deduction
A deduction that reduces taxable income.
Tax-Deferred Growth
Investment growth that is not taxed while funds remain inside the RRSP.
Home Buyers' Plan (HBP)
A program that allows qualifying RRSP withdrawals for a home purchase.
Lifelong Learning Plan (LLP)
A program that allows qualifying RRSP withdrawals for education.
RRIF
Registered Retirement Income Fund, a retirement income vehicle that RRSPs typically convert to after age 71.
Compliance Notes
RRSP contribution limits are established by CRA.
Withdrawals are taxable.
Contribution room is based on earned income and pension adjustments.
Tax treatment may vary based on individual circumstances.
Clients should seek professional tax advice for tax-related questions.