Savings and Registered Accounts

What Is RRSP (Registered Retirement Savings Plan)?

A tax-sheltered retirement savings account where contributions reduce your taxable income and investments grow tax-deferred until withdrawal.

Definition

A Registered Retirement Savings Plan (RRSP) is a Canadian government-registered account designed for retirement savings. Contributions are tax-deductible, meaning they reduce your taxable income in the year you contribute, providing an immediate tax refund or reduced tax owing. Investments inside an RRSP grow tax-deferred, so no tax is paid on growth until withdrawal. The annual RRSP contribution limit is 18% of the previous year's earned income, capped at $32,490 for 2026. Unused contribution room carries forward indefinitely. You must close your RRSP and convert it to a Registered Retirement Income Fund (RRIF) or annuity by December 31 of the year you turn 71. Withdrawals are added to your income and taxed at your marginal rate.

Formula

Annual limit = min(earned income x 18%, $32,490 for 2026)

Example

You earn $90,000 in 2025. Your 2026 RRSP limit = min($90,000 x 18%, $32,490) = min($16,200, $32,490) = $16,200. Contributing this reduces your 2026 taxable income by $16,200.

Use It

Try the RRSP Calculator

Related Terms

TFSA (Tax-Free Savings Account)A registered Canadian savings account where contributions are after-tax but all growth and withdrawals are completely tax-free.RRIF (Registered Retirement Income Fund)An account you convert your RRSP into by December 31 of the year you turn 71. Provides a regulated annual income stream in retirement, with minimum withdrawals taxed as income.RESP (Registered Education Savings Plan)A tax-sheltered account for saving for a child's post-secondary education, boosted by the federal Canada Education Savings Grant (CESG).
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