What Is an RRSP?
An RRSP (Registered Retirement Savings Plan) is a Canadian retirement account. Contributions are deducted from your taxable income, investments grow tax-deferred, and withdrawals are taxed as income. For 2026 you can contribute 18% of last year’s earned income, up to $33,810, plus any unused room from earlier years.
Limit and deadline
Your exact room is on your latest notice of assessment from the CRA: 18% of the previous year’s earned income up to the year’s maximum, less any pension adjustment from a workplace plan, plus unused room carried forward. Overcontributing more than $2,000 above your room costs 1% of the excess a month.
Contributions made in the first 60 days of a year can be deducted on the previous year’s return, so the deadline for the 2026 tax year falls in early March 2027.
Withdrawals
Money taken out is added to your income for the year, and the bank withholds tax up front (10% to 30% outside Quebec, depending on the amount). Unlike a TFSA, the room used is not given back.
Two programs allow tax-free withdrawals that are paid back later: the Home Buyers’ Plan (up to $60,000 towards a first home) and the Lifelong Learning Plan (education). By the end of the year you turn 71, an RRSP must be converted into a RRIF or an annuity.
RRSP or TFSA?
The RRSP’s advantage is the gap between your tax rate now and in retirement: deduct at a high rate, withdraw at a lower one. For someone in a low bracket today, a TFSA is often the better first account.
An RRSP is also the usual home for US dividend payers: the Canada–US tax treaty exempts retirement accounts from the US’s 15% withholding on dividends, which a TFSA pays.
Put it to use
Canadian dividend stocks →Canadian ETFs →Canada’s economy and the Bank of Canada rate →General information, not investment advice.