The Registered Retirement Savings Plan (RRSP)

A RRSP is a registered account designed to help you save for retirement while lowering your current tax bill. Contributions are tax-deductible, and investments grow tax-deferred until withdrawal.

The RRSP is one of several accounts you can use to save toward your retirement. Consider combining savings from your individual RRSP with any funds you can access through a TFSA, a group RRSP, a spousal RRSP or employer-sponsored pension to maximize your nest egg.
 

You can open an RRSP if you are a Canadian resident under the age of 71 and have earned income that you reported on your last tax return. If your spouse is under the age of 71, you can also open a spousal RRSP, which is discussed in more detail below.

The amount you can contribute, or your “contribution room,” is determined by your earned income. Your yearly contribution room is based on 18% of your previous year’s earned income, less any pension adjustment. The annual dollar limit varies from year to year: $32,490 for 2025 and $33,810 for 2026. Thereafter, the limit will be indexed to average wage growth. Keep in mind that unused contribution room can be carried forward indefinitely to future years. The Canada Revenue Agency (CRA) will advise you, by Notice of Assessment, of your contribution room.

RRSP contributions must be made by the deadline (first 60 days) in the current year to count toward contributions for the previous tax year. The last day to contribute to an RRSP for the 2025 tax year is March 2, 2026. RRSP contributions lower your taxable income now and grow tax-deferred until you take the money out. When you withdraw, the amount is taxed as income at your current marginal tax rate.

To correct an overcontribution, you can complete a T1-OVP form and submit it to the CRA. Upon approval, you can submit this form to Fidelity and withdraw the applicable amount, without incurring withholding taxes.

Income as well as gains earned in an RRSP are tax-deferred. This means that any investment income and capital gains generated in your RRSP are not included in your annual taxable income for the year in which it is earned. Instead, these amounts can continue to grow and compound inside your RRSP tax-deferred until withdrawal.

An RRSP allows you to invest in a wide range of assets, such as mutual funds and exchange-traded funds (ETFs). There are prohibited investment rules and non-qualified investment rules that apply to this account. These rules disallow non-arm’s length investments and investments in assets such as land, shares of private corporations and general partnership units.

Investments that qualify for an RRSP:

Before the age of 71, any money withdrawn from your RRSP is added to your taxable income for the year and subject to withholding tax. Withholding tax rates are based on the gross amount of the withdrawal. The following mandatory minimum withholding tax rates are applicable:*

* Mandatory minimum withholding tax rates for Canadian residents. The above are withholding tax rates, the amount withheld will be applied towards the actual taxes owing calculated with your personal tax return.

There are two special options that allow you to withdraw from your RRSP without paying taxes or including the withdrawals in income when you file your taxes:

• Home Buyers’ Plan (HBP): You can withdraw up to $60,000 to buy or build your first home. You have 15 years to repay it, starting the second year after the year you made your first withdrawal.
• Lifelong Learning Plan (LLP): You can take out up to $10,000 per year with a lifetime maximum of $20,000 to pay for full-time education for you or your spouse. You have 10 years to repay it, starting five years after you made your first withdrawal.

You can transfer funds from one RRSP to another without triggering taxes, but you need to arrange for your financial institution to handle the transfer. If you withdraw the funds yourself and redeposit them into another RRSP, it’s considered a qualifying withdrawal, and you’ll be taxed on the withdrawal. You will also lose the contribution room for the amount withdrawn.

Repayments under the HBP and LLP can be made to any of your RRSP accounts. It does not have to be repaid to the same RRSP account from which you made the withdrawals. If your spouse withdraws the amount from a spousal RRSP, they must repay the amount to an individual RRSP in their name.

A spousal RRSP (SRRSP) allows married or common-law partners to team up on saving for retirement. The account is held by the lower-earning partner, but the higher-earning partner can make contributions and enjoy the tax deductions that come with them. This would use the higher-earning partner’s contribution room. Withdrawals are taxed in the hands of the lower-income partner, which can help reduce your overall tax bill as a couple. You can continue contributing to the account until the youngest partner turns 71, so long as you have contribution room available. Keep in mind there are attribution rules for withdrawals that may impact your tax bill if you are a contributing spouse. 

Your RRSP must be closed by December 31 of the year you turn age 71, or in the case of a spousal RRSP, the year the lower-income partner turns 71. When you close the account, you have options, such as withdrawing the full amount (which would be a taxable event) or rolling the money into a Registered Retirement Income Fund (RRIF) (which would be tax-deferred).
 

You may designate a spouse or common-law partner or a non-spouse or a child/grandchild who is financially dependent as a beneficiary. The beneficiary would become the new holder immediately upon death, so long as they meet the eligibility criteria to open an RRSP. The beneficiary becomes responsible for taxes on amounts they withdraw from the account. If no eligible beneficiary is named, there is a deemed disposition at fair market value (FMV) at the time of death, and this amount will be taxed as part of the account holder’s income for the year of death.

You can continue to make contributions to your existing RRSP after moving from Canada, but you will stop accruing contribution room if you are no longer reporting earned income in Canada. RRSP withdrawals are subject to mandatory withholding tax, which may vary depending on your new country of residence. If you participated in the Home Buyers’ Plan, there are specific rules that apply for repayment. 

Fidelity does not offer RRSP loans.