RRSP (Registered Retirement Savings Plan)
A tax-deferred retirement account where contributions reduce taxable income and growth is sheltered until withdrawal.
Each year you can contribute 18% of the prior year’s earned income, up to the CRA’s annual dollar cap ($31,560 for 2024), minus any pension adjustment. Unused room carries forward. Contributions made by March 1 (or 60 days into the new year) can be deducted against the prior tax year. Withdrawals are fully taxed as ordinary income, so the RRSP works best if your marginal tax rate at contribution is higher than at withdrawal. By the end of the year you turn 71, the RRSP must be collapsed, converted to a RRIF, or used to buy an annuity.
A 60-second lesson that puts this term in context, alongside the others, lives inside the Finlo app.