Registered Retirement Savings Plan
RRSP: Tax-Smart Retirement Savings
A Registered Retirement Savings Plan (RRSP) is a cornerstone of retirement planning for Canadians, offering tax deductions and deferred growth. For high-income professionals, executives, and athletes, RRSPs provide a disciplined way to save for the future while reducing your tax bill today.
What Is a RRSP?
An RRSP is a registered account under the Canadian Income Tax Act that allows you to contribute pre-tax income, deduct contributions from your taxable income, and defer taxes on investment growth until withdrawal, typically in retirement.
Key Features:
Tax Deductions: Contributions reduce your taxable income.
Tax-Deferred Growth: Investment earnings are not taxed until withdrawn.
Contribution Limits: 18% of earned income up to a cap (e.g., $32,490 for 2025), plus unused room.
Who Should Consider a RRSP?
High-Income Earners: Maximize tax deductions in high-tax years.
Professionals and Executives: Build retirement savings with tax-deferred growth.
Athletes: Defer income from peak earning years to lower-tax retirement years.
Long-Term Savers: Those planning for retirement or major milestones like home purchases.
Key Benefits
Immediate Tax Savings: Contributions lower your taxable income, reducing your tax bill.
Tax-Deferred Growth: Investments grow without annual tax on earnings.
Flexible Use: Use funds for retirement, a first home (HBP), or education (LLP) with tax advantages.
Spousal RRSPs: Split income with a spouse to reduce taxes in retirement.
Carry-Forward Room: Unused contribution room accumulates indefinitely.
How It Works
Open an RRSP: Set up through a financial institution or advisor.
Contribute: Add up to your annual limit, based on earned income and CRA limits.
Deduct: Claim contributions on your tax return to reduce taxable income.
Invest: Choose from segregated funds, mutual funds, stocks, bonds, or GICs to grow your savings.
Withdraw: Funds are taxed as income upon withdrawal, ideally in lower-tax years. Convert to a RRIF by age 71.
Frequently Asked Questions (FAQs)
Q: How much can I contribute to an RRSP?
A: Up to 18% of your previous year’s earned income, capped at $32,490 for 2025, plus unused room.
Q: Are RRSP withdrawals taxable?
A: Yes, withdrawals are taxed as ordinary income, except for HBP or LLP programs.
Q: Can I contribute if I’m a non-resident?
A: Yes, if you have Canadian earned income and contribution room, but consult a tax advisor for treaty implications.
Q: What happens at age 71?
A: You must convert your RRSP to a RRIF, annuity, or withdraw funds by the end of the year you turn 71.
Q: Can RRSPs be used for cross-border planning?
A: Yes, but withdrawals may face withholding taxes (e.g., 15–25% under treaties) if you’re a non-resident.
Why Choose New World Agency?
We specialize in integrating RRSPs into comprehensive protection strategies for high-performance individuals. Our team collaborates with your advisors to maximize tax savings and align your RRSP with your retirement and legacy goals.
Secure Your Retirement Today
An RRSP is a proven way to save smarter and reduce taxes. Let us help you build a plan that works for you.