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RRSPs - The Great Canadian Tax Break

Registered Retirement Savings Plans in Canada


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Updated: 01/05/2014

Whether you're just starting out in the work force, or well advanced in your retirement planning, it's in your best interest to stay up to date on one of Canada's best tax breaks - registered retirement savings plans or RRSPs. The deadline to make contributions eligible for deductions on your 2013 income tax is March 3, 2014, but the sooner you make your contribution, the better. December 31 of the year you turn 71 is the last day you can contribute to your own RRSP.

RRSP Basics

It may not be light reading, but the authoritative source on retirement savings plans is the Canada Revenue Agency section on RRSPs and related plans. It's a good idea to look through this area before the RRSP deadline arrives, in case there are still ways you can save on your taxes. You'll find information on setting up an RRSP, making contributions and withdrawals, getting payments and what to do when you turn 71.

Most Canadian banks and financial planning sites also have general RRSP information. One example is Investor Education Fund: RRSPs where you can find useful articles on the basics, from contributing to an RRSP, choosing the right RRSP for you and getting income from your RRSP savings.

When you're planning your RRSP contribution, be sure to find out your RRSP contribution limit. It's also a good idea to get a copy of the latest general income tax package and do a rough cut on your income taxes so you can see what the tax benefits of different levels of RRSP contributions will be.

RRSP Rates

It's easy to get a quick handle on the going rates for RRSPs online. The Financial Post, for example, has a useful RRSP rates chart that shows current RRSP rates at major financial institutions across Canada.

Making RRSP Contributions Online

If you still prefer to keep your RRSPs with Canadian banks, you can probably make this year's contribution online. Many Canadian financial institutions allow you to contribute to an RRSP through online banking. Most restrict you to already having an RRSP with the particular bank, and paying with funds from an account at the same bank.

Other Uses of RRSPs

While RRSPs are important to your retirement planning, you can also use them to help you buy your first home, through the Home Buyers Plan, and to help finance your training and education, through the Lifelong Learning Plan.

See Also: Changes to Old Age Security (OAS)

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