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Key takeaways:
Contributing to a registered retirement savings plan (RRSP) is an effective way to start saving for your future. This account gives you access to tax advantages and benefits so you can maximize your savings. Although RRSPs are specifically designed to save for retirement, there are some other ways you could use those savings, from funding your education to even buying your first home.
Each year, you can invest in your RRSP up to your contribution limit. Your RRSP contribution limit depends on several factors including, 18% of your earned income up to the yearly maximum set by the federal government, and any unused contribution room you’ve carried forward from a previous year.
Here's everything you need to know about RRSP contribution limits and deductions for the 2024 tax year, the RRSP contribution limit deadline, and the benefits of investing in an RRSP.
An RRSP is a registered, tax-advantaged savings account set up by the Government of Canada to help Canadians save for retirement.
You can hold a variety of investments in an RRSP, such as:
- Bonds
- Cash
- Exchange-traded funds (ETFs)
- Gold
- Guaranteed investment certificates (GICs)
- Mutual funds
- Stocks
You can contribute to an RRSP as soon as you start earning an income and filing your taxes, as long as you meet the following criteria:
- You are a Canadian resident
- Have a valid social insurance number (SIN)
- Filed your income tax with the Canada Revenue Agency (CRA) the previous year
You can continue contributing until you turn 71, at which point, you’ll have to convert your RRSP into a registered retirement income fund (RRIF) or annuity.
Each year, you build RRSP contribution room. Your contribution limit is the maximum amount you can contribute to your RRSP annually.
The maximum amount you can contribute is either 18% of your earned income or the yearly maximum set by the federal government, whichever is less.
If you don’t contribute enough to reach your maximum, you don't lose your unused contribution room. The unused amount carries forward to future years to deduct against your income when you might have a higher tax rate.
If you have a group RRSP, registered pension plan (RPP) or specified pension plan (SPP) at work, any contributions to these plans reduce your overall contribution room. In addition, investments into your spouse’s or common-law partner’s RRSP or SPP will also reduce your RRSP contribution room.
The maximum RRSP contribution limit for the 2024 tax year is $31,560 plus your unused RRSP contribution room at the end of the previous year. The RRSP annual contribution limit for 2025 is $32,490.
The federal government sets the maximum RRSP contribution limit. No matter how much money you make, this is the most you can invest in an RRSP, based on 18% of your earned income.
If you're looking for where to find your RRSP contribution limit for 2024, you can log into your CRA MyAccount. There, you'll find your notice of assessment (NOA) — the document the government sends each year after you file your taxes.
Your NOA includes details on how much you owe or the size of your tax refund. It's also where you can find your RRSP deduction limit for that year and your available contribution room. If you don't have a CRA MyAccount, you can have your NOA mailed to you.
Your deduction limit is the amount of RRSP contributions you can deduct from your taxable income.
Your contribution room is your deduction limit plus any unused contributions you reported in previous years.
You have room to contribute if your total RRSP contributions (including current and unused) are less than your deduction limit. If you have a negative number on your NOA, you’ve over-contributed to your RRSP.
If you exceed your contribution limit by more than $2,000, you typically have to pay 1% per month on the contributions above your contribution limit.1 If you go over your limit by less than $2,000, you won't have to pay the penalty.
The contribution deadline for the 2024 tax year is March 3, 2025. You can deduct contributions made before this date on your 2024 tax return.
An RRSP offers several tax advantages and benefits as you save for retirement, including:
Tax-deductible: Contributing to your RRSP helps to reduce your taxable income.
Savings grow tax-free: As long as your money is in an RRSP, any interest you earn isn’t taxed.
Defer taxes: You don’t pay any taxes on an RRSP until you start making withdrawals. The idea is that by the time you start taking out money in retirement, you’ll be in a lower income bracket and won’t have to pay as much in taxes.
Spousal RRSP: If you earn more than your partner, you can contribute to a spousal RRSP to help with income splitting. You receive a tax deduction and your spouse isn't taxed until they start withdrawing the money.
Fund higher education or your first home: With the Home Buyers' Plan (HBP) and the Lifelong Learning Plan (LLP), you can borrow money from your RRSP to fund your education or buy your first home without tax penalties.
While both the tax-free savings account (TFSA) and RRSP are registered accounts that provide income tax benefits, they differ in important ways.
| RRSP | TFSA2 | |
|---|---|---|
Who qualifies for the account |
Any Canadian resident or non-resident of Canada under the age of 71 with a valid SIN* |
Any Canadian resident or non-resident 18 years or older (or the age of majority in your province) with a valid SIN* |
Tax-deductive contributions |
Yes |
No |
Tax-free withdrawals |
No |
Yes |
Maximum contribution limit |
Subject to Canada Revenue Agency (CRA) regulations |
Subject to CRA regulations |
Deadline to close account |
December 31 of the year you turn 71 is the last day you can contribute to your account |
n/a |
*A non-resident can open a TFSA if they have a valid SIN, but they cannot contribute into a TFSA. If they do so, there would be penalties. Similarly, a non-resident can open an RRSP, but they will not have earned contribution room and thereby tax deduction benefits.
If you're trying to decide whether to invest in an RRSP, TFSA, or both, learn about the key benefits and differences.
Check out our retirement savings calculator to find out how much you'll need to save for your ideal retirement. As soon as you earn an income and file your taxes with the CRA, you can open an RRSP. Whether it be travel and adventure or days of leisure, when you envision the retirement you want, it makes sense to take the steps to get you there.
This article is provided for information purposes only. It is not to be relied upon as investment advice or guarantees about the future, nor should it be considered a recommendation to buy or sell. Information contained in this article, including information relating to interest rates, market conditions, tax rules, and other investment factors are subject to change without notice and The Bank of Nova Scotia is not responsible to update this information. References to any third party product or service, opinion or statement, or the use of any trade, firm or corporation name does not constitute endorsement, recommendation, or approval by The Bank of Nova Scotia of any of the products, services or opinions of the third party. All third-party sources are believed to be accurate and reliable as of the date of publication and The Bank of Nova Scotia does not guarantee its accuracy or reliability. Readers should consult their own professional advisor for specific investment and/or tax advice tailored to their needs to ensure that individual circumstances are considered properly, and action is taken based on the latest available information.
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