A Registered Retirement Savings Plan (RRSP) is a retirement plan that is registered with the federal government and that you, your spouse, or common-law partner can contribute into until the end of the year when the plan holder turns 71.
RRSP contributions are used to reduce your income tax. Any income you earn in the RRSP is exempt from tax until withdrawn from the plan. When you withdraw money from your RRSP it is considered income in the year it was withdrawn.
PRIMARY INVESTMENT OPTIONS FOR AN RRSP ACCOUNT:
OTHER QUALIFIED RRSP INVESTMENT OPTIONS
If you have questions about investment choices for an RRSP account which aren't listed above, please contact the office to inquire.
With a spousal RRSP, you can direct part or all of your contributions to an RRSP in your spouse's name. A spousal RRSP will help you save tax during retirement through income splitting, since the income will be taxed at your spouse's tax rate instead.
RRIF - You can withdraw from your RRIF/RRSP to supplement your income; most often done during retirement while your taxable income is lower. Some special situations could apply where withdrawing from your RRIF before retirement makes sense.
Home Buyers Plan - You can withdraw from your RRSP to buy or build a home for yourself or for someone who is related to you and is disabled. The maximum Home Buyers Plan Withdrawal is $35,000 and must be recontributed over the next 15 years.
Lifelong Learning Plan - You can withdraw from your RRSP to finance full-time training or education for you, your spouse, or common-law partner. The maximum withdrawal for Lifelong Learning Plan is $10,000 a year up to a total of $20,000 over the course of 4 years.
Your contribution is calculated each year as 18% of your earned income. For example, if you made $60,000, then you can contribute a max of $10,800 for the year.
Any unused contribution room carries forward to the next year, so it's quite possible that you have a very large amount of contribution room, especially if you've never made an RRSP contribution before.
The last day you can contribute money to an RRSP to count towards the previous tax year is what people refer to as the RRSP deadline. The deadline will be the first business day in March of every year.
For example, if you put money into your RRSP any time from January 1st, 2022 until the RRSP deadline (March 2nd, 2022), you would be able to apply that to your 2021 tax year and receive taxes back based on your 2021 tax year.
It depends on your specific situation, goals, and retirement you envision for yourself, but often the answer is yes.
Generally speaking, it's a good idea to have a balanced approach to saving for retirement through pension, RRSP, TFSA, etc., so having and contributing to an RRSP while having a pension is usually a good idea.