How RRSPs work - Seaport Credit

A Registered Retirement Savings Plan (RRSP) is an account registered with the federal government that you use to save for retirement. RRSPs have special tax advantages.

3 tax advantages

  1. Tax Deductible Contributions: You get immediate tax relief by deducting your RRSP contributions from your income each year. Effectively, your contributions are made with pre-tax dollars.
  2. Tax-sheltered earnings: The money you earn on your RRSP investments is not taxed as long as you stay in the plan.
  3. Tax Deferral: You will pay taxes on your RRSP savings when you withdraw them from the plan. That includes both your investment earnings and your contributions. But you have deferred this tax liability into the future when your marginal tax rate may be lower in retirement than during your contribution years.

How much can you contribute?

Anyone who files a tax return and has earned income can open and contribute to an RRSP. There are limits on how much you can contribute to an RRSP each year. You can contribute the lesser of:

  • 18% of your income earned in the previous year, or
  • the maximum contribution amount for tax year 2022: $29,210.

If you are a member of a pension plan, your pension adjustment will reduce the amount you can contribute to your RRSP.


If you don't have the money to contribute in a year, you can take your RRSP contribution room forward and use it in the future. Learn more about how RRSPs work.


The value of your RRSP can go up or down, depending on the investments you have. Learn more about investment risks.

How long your RRSP can stay open

You must close your RRSP in the year you turn 71. You can withdraw your RRSP savings in cash, convert your RRSP to an RRIF, or purchase an annuity.

Where to open an RRSP account

  • Trusted banks and companies.
  • Savings and credit cooperatives and popular savings banks.
  • Investment fund companies.
  • Investment firms (for self-directed RRSPs).
  • Life insurance companies.


Both offer tax advantages. Learn how they differ by reading a comparison of the TFSA and RRSP here.


Contact us (form below), we will gladly help you make the calculation that best suits your needs.


You can open an RRSP at any age as long as you have earned income and file a tax return.

You must close your RRSP when you turn 71.

Source: OSC

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