Should I put my savings into an RRSP? If I do that, will I pay less taxes? What happens if I want to access that money before I retire? These are just a few of the RRSP-related questions we've received lately. So, here's everything you need to know about RRSPs in one episode. Just in time for tax season!
With Jackie Porter, certified financial planner and ambassador for FP Canada, a national not-for-profit organization dedicated to championing better financial wellness for all Canadians. Learn more about FP Canada here.
For clarity, here are some of the rules around RRSP contributions and withdrawals:
- Your annual contribution limit is determined by your previous year’s income.
- For the most part, if you make a withdrawal from your RRSP account, it is considered income, and taxed accordingly. Generally speaking, your financial institution will withhold the tax on your withdrawal. The rate depends on how much money you are withdrawing.
- In certain instances, you can make a withdrawal WITHOUT any tax penalty - for example, using the Home Buyer’s Plan or the Lifelong Learning Plan.
For the full list of rules and regulations regarding RRSPs, you can visit the CRA’s website.
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