RRSP (Registered Retirement Savings Plan)
An RRSP is a government-registered account where contributions are tax-deductible and investments grow tax-free until withdrawal. When you contribute to an RRSP, the amount is deducted from your taxable income — effectively saving you tax at your marginal rate. Your contribution room is 18% of the previous year's earned income, up to an annual maximum ($32,490 in 2025).
RRSPs are most valuable when you contribute while in a higher tax bracket and withdraw in retirement at a lower rate. You can hold a wide range of investments inside an RRSP, including stocks, bonds, GICs, mutual funds, and ETFs. Unused contribution room carries forward indefinitely, and you can check your available room on your NOA or through CRA My Account.
By December 31 of the year you turn 71, you must convert your RRSP to a RRIF (which requires minimum annual withdrawals) or purchase an annuity. Special programs allow early tax-free RRSP withdrawals: the Home Buyers' Plan (HBP) for purchasing a first home and the Lifelong Learning Plan (LLP) for education.
Related Terms
RRIF (Registered Retirement Income Fund)
A RRIF is the account you convert your RRSP into when you're ready to start drawing retirement income.
HBP (Home Buyers' Plan)
The Home Buyers' Plan (HBP) allows first-time home buyers to withdraw up to $35,000 from their RRSP tax-free to purchase or build a qualifying home.
LLP (Lifelong Learning Plan)
The Lifelong Learning Plan (LLP) allows you to withdraw up to $10,000 per year from your RRSP (maximum $20,000 total) to finance full-time training or education for yourself or your spouse.
Pension Adjustment (PA)
If you belong to a Registered Pension Plan (RPP) or Deferred Profit Sharing Plan (DPSP) through your employer, your employer reports a Pension Adjustment (PA) on your T4 slip.
TFSA (Tax-Free Savings Account)
A TFSA allows Canadian residents aged 18 and older to invest money and withdraw it at any time without paying tax on the growth.
Tax Deduction
A tax deduction reduces your taxable income before tax is calculated, effectively saving you money at your marginal tax rate.