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The RRSP contribution limit is 18% of your earned income, less any pension adjustment, and the maximum contribution limit for 2026 is $33,810 up from $32,490. You need to check your Notice of Assessment (NOA)  to confirm your contribution limit.

You can contribute to your RRSP at any time during the calendar year. If you want to use the deduction against the previous year’s income tax, then you can contribute as late as 60 days after the calendar year end. The deadline for 2025 contributions is March2, 2026 

CRA allows a $2,000 lifetime over contribution limit without penalty. If you exceed the $2,000 limit, then you’re subject to a 1% penalty per month until you make the correction. Some people over contribute intentionally to allow for a longer compounding of the money. There is no tax deduction for the over contribution.

If you have a Group RRSP or a company pension plan, your RRSP room will be reduced by the amount contributed in that year..

If you don’t contribute, or even if you do, you are not required to apply the contribution against that year’s income tax. You can save the receipt or carry forward the unused room indefinitely until you are in a higher tax bracket.

If you withdraw money from an RRSP there is tax withheld at the time of withdrawal. The withholding tax is as follows:

                   10%       up to $5,000

                   20%      $5,000 to $15,000

                   30%       over $15,000

Withdrawals from an RRSP will be added to your income for that year and may attract additional income tax.

 Contributions to your RRSP can be made up until December 31st in the year you turn 71.  

By the end of the year when you turn 71, you must cash out, convert it to RRIF or purchase an annuity. 

Yes, if you want to use the funds to return to school under the Life Learning Plan (LLP), or to purchase a home under the Home Buyers Plan (HBP), you can access the funds tax free with a repayment schedule. The maximum withdrawal from an RRSP for HBP is $60,000 per person, and $10,000 per year from LLP to a maximum of $20,000.

Repayment for HBP is over 15 years and 10 years for LLP. Any amount not repaid will be added to your taxes for that year 1/10th in the case of HBP and 1/15th in the case of LLP. Repayment for HBP starts in the second year following the withdrawal and 2 years after finishing your LLP course.

Many people use the term “I bought an RRSP” and it’s a common term I hear. The reality is that you don’t buy an RRSP. Think of an RRSP like a shopping basket. What you put into that basket for your retirement is what you are buying. 

Some of the investments eligible for your basket include: GICs, Mutual Funds, Stocks, ETFs, Bonds and even just holding Cash. It’s best to speak with a qualified advisor to see what investments or combinations are best suited for your goals.

The most common mistakes with RRSPs are:

1. Overcontributing and triggering the 1% monthly penalty.
2. Making withdrawals in high income years without proper planning.
3. Not structuring your Home Buyers Plan and Life Long Learning Plan withdrawals properly.