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Registered Retirement Savings Plan (RRSP)

Registered Retirement Savings Plan (RRSP)

A Registered Retirement Savings Plan (RRSP) is a savings strategy that helps you build capital for retirement. It offers you two tax advantages: your contributions are deducted from your taxable income and the return on your investment is entirely reinvested into your tax-sheltered plan.

To help you save for your retirement, an RRSP (or Registered Retirement Savings Plan) offers you two tax advantages:

  • Your contributions are deducted from your taxable income.
  • Your investment returns are in a tax shelter. Since these returns are entirely reinvested in your plan, your assets will grow more quickly.

How much can you contribute?

Tax laws permit you, for any given year, to contribute an amount equal to 18% of your eligible income from the previous year to your or your spouse's RRSP (see table below of maximum RRSP deduction limit for subsequent years) less the pension adjustment (PA) for the same year. Your employer calculates the PA based on the benefits accumulated in your name in a supplemental pension plan or a DPSP.

Maximum RRSP Deduction Limit for Subsequent Years
Fiscal Year Maximum Deduction
2010 $22,000
2011 $22 450

2012

$22,970
2013 $23,820
2014 $24,270
2015 $24,930
2016 $25,370

You can increase your RRSP contribution by using your unused contribution room from previous years and making a surplus contribution.

This information (annual contribution, unused contribution room and pension adjustment) appears on the maximum RRSP deduction statement that the Canada Revenue Agency (CRA) sends you each year when it receives your income tax return.

You must make your contributions for a single tax year before the end of the first 60 days of the following year.