What’s my RRSP contribution limit?

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What’s an RRSP?

An RRSP is a savings account registered with the Canadian government. It’s designed to help Canadians save for retirement. RRSP contributions are tax-deductible, meaning they can reduce your taxable income for that tax year, but the deductions can also be delayed and carried forward to deduct in a future year.

Any investment growth or income earned within an RRSP is exempt from annual tax. You must, however, pay tax at the time of withdrawal—ideally, when you’re in retirement or otherwise in a lower tax bracket than you are today.

These tax advantages make RRSPs a valuable tool for retirement saving. However, there are limits on how much you can contribute to your RRSP in any given year. Make sure you know your RRSP limit to avoid unnecessary tax penalties.

What’s my RRSP contribution limit?

While RRSP rules apply to every Canadian, each of us have our own RRSP contribution limit. There are three factors that determine your individual contribution limit:

• The RRSP contribution limit set by the Canadian government. This limit changes annually. For 2024, the maximum any Canadian can contribute to their RRSP is $31,560 (up from $30,780 in 2023). Below, you will find the contribution limits for each of the past 10 years.
• Your earned income reported during the previous tax year. Your individual contribution limit is 18% of your earned income from the previous tax year, or the annual maximum set by the government—whichever is less. This means that only individuals with an earned income of $175,333 or more in 2024 will earn the full $31,560 RRSP contribution room available this year. Earned income for RRSP purposes is most commonly the amount in box 14 of your T4 slips; earned income also includes self-employed net income, Canada Pension Plan (CPP)/Québec Pension Plan (QPP) disability payments and net rental income.
• RRSP room may be reduced if you are a pension plan member. If you are a member of a defined contribution (DC) or defined benefit (DB) pension, you will have a “pension adjustment” on your T4 slip. This pension adjustment reduces your RRSP room for the following year. The reason for the adjustment is to even the playing field between pension plan members and those without pensions, so pension plan members don’t get more ability to save for retirement on a tax-deferred basis.
• The amount of unused contribution room you can carry forward. Unused RRSP contribution room in one year can be carried forward to another year. Your total contribution room is therefore made up of your limit from the current year, plus any unused contribution room from previous years. Read more about the carry-forward rules for unused RRSP contributions.

RRSP contribution limits by year

The RRSP deadline this year

The deadline for RRSP contributions for the 2023 tax year is Feb. 29, 2024. Contributions made in the first 60 days of the year can be applied to the previous taxation year.

Where can you find your RRSP contribution limit?

After the Canada Revenue Agency (CRA) processes your tax return, it sends a Notice of Assessment (NOA), which includes your next year’s contribution limit. This notice also shows your unused contribution room. You can also call your local Tax Information Phone Systems (TIPS) number, and be sure to have your SIN and previous tax return ready. Alternatively, you can register for My Account with CRA to view your RRSP limit, track your refund, make updates to your return and monitor payments.

What happens if you overcontribute to your RRSP?

If you overcontribute to your RRSP by more than $2,000, you will be subject to a penalty tax. Typically, the penalty is 1% per month on the excess contribution for as long as it remains in your account. You can stop the penalty from growing if you withdraw the excess amount. (Read more about what to do if you have overcontributed to your RRSP.)

What is the age limit to contribute?

You can open an RRSP at any age. You can then contribute to your RRSP until Dec. 31 of the year you turn 71. At that time, you must either cash out your RRSP, convert it to a registered retirement income fund (RRIF) or purchase an annuity.

If you contribute to a spousal RRSP, you can do so until Dec. 31 of the year your spouse or common-law partner turns 71.

The types of investments you can hold in an RRSP

You can hold the following types of investments inside your RRSP:

• Cash (money): This includes literal cash, as well as money-market mutual funds. Only government-issued cash qualifies, meaning cryptocurrency is not an RRSP-eligible investment.
• Guaranteed investment certificates (GICs): GICs are investment assets that pay a guaranteed interest rate for a specified term—typically, longer terms offer higher rates. You can buy a GIC with cash inside your RRSP.
• Mutual funds: A mutual fund pools investments from many investors to buy a basket of assets, usually stocks or bonds. Mutual funds can be actively or passively managed, and their fees vary accordingly.
• Exchange-traded funds (ETFs): ETFs track, or mimic, various stock indexes, and their units trade on stock exchanges. You can choose from actively and passively managed ETFs.
• Bonds: Buying a bond is making a loan to a government or a corporation, in exchange for interest payments. Investors can buy individual bonds in an RRSP account, although it is more common to own bonds through a mutual fund or ETF.
• Stocks (also called equities or securities): This generally includes stocks listed on the Toronto Stock Exchange, the New York Stock Exchange or NASDAQ exchange. There are other North American stock exchanges, though, and technically any stock that trades on a recognized stock exchange qualifies. Foreign, non­–North American securities are most commonly purchased by buying their American Depositary Receipts (ADRs) on a U.S. exchange.

You can open an RRSP with a bank, credit union or trust company, which can be a good option for those who want the option of speaking with someone face-to-face. In addition, discount online brokers and robo-advisors allow you to set up and manage your own RRSP account in minutes online, from the comfort of your couch.

What else you can use your RRSP money for?

There are two programs you can use to take money out of an RRSP plan without incurring tax: Home Buyers’ Plan (HBP) and the Lifelong Learning Plan (LLP).

The HBP allows you to take up to $35,000 out of your RRSP ($70,000 per couple) to put towards the down payment of a first home. You aren’t taxed on the withdrawal, but you’ll have to repay your RRSP over 15 years, starting two years after the withdrawal.

The LLP allows you to withdraw up to $10,000 a year (or up to $20,000 in total) to help you or your spouse cover the costs of post-secondary education. You can’t use it for your children’s education, though. Participants must make repayments over 10 years starting two years after their last eligible withdrawal, or five years after the first withdrawal, depending on which due date comes first.

Other important tax information

If you’re looking at your RRSP as you’re prepping for tax season, there’s more to know. For more information on the deadline to file your 2023 taxes, which tax bracket you fall into, and what you can claim, read our income tax guide for Canadians.

Read more about GICs as a good investment:

• How do the RRSP contribution carry forward rules work?
• “Help! My RRSPs are all over the place”
• The benefits and flexibility of family RESPs
• How to ladder your GICs in Canada

About MoneySense Editors

MoneySense editors and journalists work closely with leading personal finance experts in Canada. Since 1999, our award-winning magazine has helped Canadians navigate money matters.

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