Registered Retirement Savings Plans

Everything you need to know about RRSPs

What is an RRSP?

An RRSP is an account created by the Canadian government to help Canadians save for retirement. As a registered account, RRSPs have rules and regulations around: contributing to an RRSP, how much you can contribute, what investments an RRSP can hold, and withdrawing money from your RRSP.

What are the tax-benefits of an RRSP?

  • Tax-deductible contributions: commonly thought of as a way to get tax-refunds. These are a mainstay of RRSPs and part of the reason why they’re so popular. When you make a deposit into your RRSP, the amount comes off your taxable income for the year, and you could receive money back from the government at tax time.
    • Example, if you earned $65,000 last year and you contributed $7,000 to your RRSP, you would only pay taxes as if you earned $58,000. This can result in a much-appreciated tax return at the end of the tax season.
  • Tax-sheltered earnings: the investments in your RRSP grow tax-free. So you benefit from years of compound growth without having the tax-man reaching in while it’s in the account. However, when you retire you will have to pay taxes on the money you withdraw.
  • Tax deferral: When you’re retired you could be earning little to no income, so when you withdraw money from your RRSPs, they will typically be taxed in a lower tax bracket than they would’ve been in your working years.

What to know about RRSP contributions

  • Because of the tax benefits, the government limits the amount you can put into your RRSP. You can deposit 18% of your earned income from the previous year (up to a maximum $26,500 for 2019).
  • Any leftover room from previous years will carry over indefinitely until you use it

What to know about withdrawals

  • An RRSP must be converted to a Registered Retirement Income Fund (RRIF) in order to make withdrawals.
  • If you make a withdrawal before you retire or directly from your RRSP, you will have to pay tax on the amount you withdraw.
  • Financial institutions will withhold a certain amount of tax directly when you withdraw:
Amount withdrawnTax withheldTax withheld (Quebec )
$5,000 - $15,00020%10%
$15,000 +30%15%

Extra benefits of an RRSP

  • The Home Buyers’ Plan (HBP) allows you to withdraw up to $35,000 from your RRSP tax-free to pay for a home (subject to certain conditions), as long as you re-deposit what you withdrew within 15 years.
  • The Lifelong Learning Plan (LLP) allows you to withdraw up to $20,000 ($10,000 per calendar year) from your RRSP tax-free to pay for their own education (subject to certain conditions), as long as you re-deposit what you withdrew within 10 years.

Investments you can hold in an RRSP

While some think an RRSP is simply a savings account, RRSPs are an incredibly versatile investment account. You can build and diversify a portfolio by investing in RRSP-eligible investment products:

  • Stocks (both Canadian and international)
  • ETFs
  • Options
  • Mutual funds
  • Bonds
  • Gold and silver bars
  • GICs
  • Cash

For a full list of eligible investments, visit the CRA

Benefits of a Questrade RRSP

  • No annual account fee. No opening fees.
  • Hold both Canadian and U.S. dollars in the account at the same time.
  • Open the account in minutes.
  • Contribute to your RRSP quickly and easily online. No need to book an appointment or wait in line.

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Get answers to our frequently asked questions

Is my RRSP locked where it is?

No, it’s your money. You can move your RRSP anywhere you want.

Is there a set-up fee?

No, with Questrade there are no fees to open an RRSP

Is there an annual trustee fee?

No, Questrade doesn’t charge an annual trustee fee for accounts.

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