RSPs were designed for Canadians as an incentive to save for retirement during their working phase. 

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• The contributions are Tax-Deductible if contributed during a specific year or 60 days after year end. 

• You can carry forward unused contribution room to use in future years.

• Income earned inside the RSP account grows tax free and will only be taxed upon withdrawing from the account.

• When making RSP contributions, please consider any Pension Adjustment (PA) from the previous year 

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Advantages of RRSPs

• Provides growth of your retirement savings due to the compounding of tax-deferred income within the account as well as the deferral of tax on capital gains.

• Facilitates income splitting upon retirement when the couple, presumably, is at a lower tax bracket.

• Plan holders can borrow from the RRSP to fund the purchase of their first home through the

  • Home Buyers' Plan. 

• Can be a source of additional funds if the need arises. In this case the withdrawals are taxed and remitted to CRA.​

  • 10% tax withheld for withdrawals under      C$ 5,000​

  • 20% tax withheld for withdrawals up to       C$15,000

  • 30% tax withheld for withdrawals above     C$15,000

    • Ask us about our strategy to defer the tax deductible and     solutions on income splitting tax-savings.

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Disadvantages of RRSPs

• The withdrawals are taxed as income.

• RRSP assets can-not be used as collateral.

• Upon passing the full RSP account becomes part of the Estate and is fully taxable.

• Assets in an RRSP account are not protected against creditor claims but under certain circumstances. 

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(Video Source:Financial Consumer Agency of Canada)