The Registered Retirement Savings Plan (RRSP) is a Canadian financial instrument designed for retirement savings. Contributions to an RRSP are tax-deductible, which can reduce an individual’s tax burden for the year they are made.
The funds within an RRSP grow tax-free until withdrawal, typically at retirement when the individual may be in a lower tax bracket. The RRSP contribution limit is based on income and has an annual cap, which was $31,560 in 2024. It’s a flexible and advantageous way for Canadians to save for their future while enjoying tax benefits today.
Contributions to an RRSP grow tax-free until withdrawal, allowing for potentially higher returns on investment.
Contributions can be deducted from your taxable income, potentially lowering your tax bill in the contribution year.
The RRSP Home Buyers' Plan and Lifelong Learning Plan allow for tax-free withdrawals for specific purposes, such as buying a first home or funding education.
Contributions to a spousal RRSP can help lower the overall tax burden for couples by equalizing retirement income.
RRSPs provide a source of income during retirement when your income may be lower, and thus, taxed at a lower rate.