Registered Retirement Savings Plan (RRSP)

Contributing to an RRSP is still one of the most popular and tax-effective ways to save for your retirement. Your financial security and investment representative has the tools to help you build a portfolio to help you meet your retirement goals.

Contributing to an RRSP

To help Canadians save for retirement, the federal government makes tax allowances for those who contribute to registered plans.

You can save in two ways:

Contributing money to an RRSP can lower your income, so you pay less in taxes.
Once invested, your contributions grow tax-deferred. That means you don’t pay tax on any earned income or capital gains until you take it out.

Each year, Canadians may contribute up to 18 per cent of their income, up to a maximum of $19,000 (as of 2007). If you don’t contribute the maximum amount, you may accumulate the leftover room. Once contributed, the money becomes “registered.”

Withdrawing from an RRSP

Since you receive tax benefits from contributing to an RRSP, there are restrictions on withdrawals. To deregister or withdraw funds, you must pay tax, an administrative fee and any fees associated with the investments.

However, in two instances¹ you may withdraw funds without penalties or taxes:

Home Buyers' Plan – allows you to withdraw up to $20,000 from RRSPs to buy or build a qualifying home for yourself (as a first-time home buyer).

You may still qualify as a first-time home buyer if you own a rental property or if you have not recently owned a home.
You have to repay the money over a 15-year period or pay tax on it.

Lifelong Learning Plan – allows you to withdraw money from RRSPs to finance training or education for you or your spouse or common-law partner. You cannot use these RRSP funds to finance a child's education.

The maximum amount you can withdraw is $20,000.
There is an annual limit of $10,000.
You must repay the money over a specified period of several years or pay tax on it.