Canada rules
RRSP (Registered Retirement Savings Plan)
Educational only, not financial advice.
An RRSP (Registered Retirement Savings Plan) is a Canadian tax-deferred retirement account. Contributions may reduce your taxable income in the year you contribute, but withdrawals are taxed as income later, typically in retirement.
Why it matters
- RRSPs are often most valuable when your tax rate at contribution is higher than your expected tax rate in retirement.
- Contribution room is based on earned income, up to an annual government-set limit, and unused room carries forward.
- Early withdrawals (outside specific programs) are taxed and generally lose that contribution room permanently.
Simple example
- Contributing to an RRSP while working (and in a higher tax bracket) and withdrawing in retirement (in a lower tax bracket) can reduce lifetime taxes paid.
- RRSP withdrawals are subject to withholding tax at the time of withdrawal, then reconciled against your actual tax owing when you file.
Related terms
Learn more
2026 limits (from the CRA)
- TFSA: the 2026 TFSA dollar limit is $7,000. Unused room carries forward.
- RRSP: the 2026 RRSP dollar limit is $33,810. Your own deduction limit is 18% of the previous year's earned income up to that amount, plus unused room, minus pension adjustments. It is shown on your notice of assessment.
- FHSA: participation room in the first year you open an FHSA is $8,000.
Checked on canada.ca on October 14, 2026. Your own room depends on your history, so confirm it in CRA My Account.
U.S. counterpart
Try it
Sources
- Canada Revenue Agency: Guide T4040, RRSPs and Other Registered Plans for Retirement
- Canada Revenue Agency: Tax rates on RRSP withdrawals
- Canada Revenue Agency: RRSP and TFSA dollar limits
- Canada Revenue Agency: First Home Savings Account (FHSA)
Reviewed by Greg Parsons. Links checked October 14, 2026. Educational only, not financial advice.