Registered Retirement Savings Plan (RRSP) Basics


Regardless of age, it’s wise to consider RRSPs.  Anything that the words “tax shelter” can be applied to is worth one’s attention, and people often regret that they didn’t start saving for their future earlier in life.

The most immediately obvious benefit is the reduction of your tax bill on account of contributions made to your RRSP.  Your RRSP contributions get deducted from your taxable income.  Any money made on RRSP investments is not taxed until it is removed from the RRSP plan.  And if you do RRSPs “right”, when you do withdraw money from the plan your tax bracket should be lower so you will be paying less overall.  The obvious longer term benefit of course is that you will have more money available when you are retired.

Some examples of investments that can be in a RRSP include:

  • GICs
  • Saving Bonds
  • Mutual funds
  • Equities
  • Income trusts
  • Cash

Eligibility is simple: you must have earned income, have a social insurance number, filed a tax return, and be under 72 years of age.  Of course there are additional considerations like your income from the previous year, the yearly maximum contribution, and sponsored pension plan contributions.

The Canada Revenue Agency has a page titled RRSPs and related plans that has further information.