The RRSP (Registered Retirement Savings Plan) is designed to encourage individuals to save for retirement. To encourage taxpayers, governments offer three key benefits:
- Contributions are 100% deductible from your taxable income.
- The tax on the earnings in the plan is deferred until the time of withdrawal from the RRSP.
- You decide when to make withdrawals.
- Maximum RRSP contribution: check your Canada Revenue Agency notice of assessment;
- RRSP maturity at age 71: you must convert your RRSPs before December 31 of your 71st birthday;
- Upon death, certain (non-taxable) rollovers are possible;
- A wide range of investment products is available;
- You can contribute to a spousal RRSP and get the deduction;
- Unused contributions are carried over to subsequent years.