An RRSP does two things. It reduces your taxable income now, and it shelters your investments from tax until you take the money out. For most working people in Ontario it is still the backbone of retirement saving.
It is also the plan where newcomers most often assume they have room when they have none, and where self-employed people miss the protection that matters most to them.
The numbers for 2026
Your contribution room is 18% of your previous year’s earned income, to a maximum of $33,810 for 2026 — less any pension adjustment if you have a workplace pension.
Unused room carries forward indefinitely. There is no deadline pressure to use it in the year it arises, and no penalty for leaving it.
You can over-contribute by $2,000 without penalty. Beyond that it is 1% per month.
The deduction does not have to be claimed in the year you contribute. You can contribute now and carry the deduction forward to a year when your income is higher — often the smarter move if you are early in your career or had an unusual year.
If you are new to Canada, read this first
RRSP room is generated by earned income reported on a Canadian tax return. It is not granted by residency and it does not accumulate before you arrive.
So in your first year in Canada, your RRSP room is zero. You generate room from your first year of Canadian earnings, and you can use it the following year.
This catches people constantly, usually in February when someone at work says “you should put money in your RRSP before the deadline.” If you landed last year, you likely cannot — and contributing anyway means a penalty. A TFSA is the right home for that money in year one.
What an RRSP can do besides retirement
Home Buyers’ Plan. Withdraw up to $60,000 tax-free toward a first home, repayable to your RRSP over 15 years. It stacks with the FHSA, so a couple who both qualify can assemble a very substantial down payment. The FHSA does not have to be repaid, so fill that one first.
Lifelong Learning Plan. Withdraw to fund full-time training or education for you or your spouse, repayable over ten years.
Both are loans from yourself. Missed repayments become taxable income, so they need to be tracked.
Why self-employed clients move their RRSP into a segregated fund contract
This is the reason most of my RRSP conversations start.
If you are a contractor, own a business, or have signed personal guarantees, an RRSP held as a segregated fund contract may be protected from creditors, provided the beneficiary is a spouse, child, grandchild or parent, or is named irrevocably.
For a trucking owner-operator or a small business owner in Peel Region, that is not a theoretical benefit. It is the difference between a bad year costing you a business and a bad year costing you a business and your retirement.
The protection is not absolute — transfers made to defeat existing creditors can be set aside — so this is planning done while things are going well, not a manoeuvre attempted once they are not.
The contract also names a beneficiary directly, so the money bypasses probate rather than sitting in your estate for months.
What happens at 71
By the end of the year you turn 71 your RRSP must be converted — normally to a RRIF, which pays you a minimum amount each year, or to an annuity, which pays a guaranteed income for life.
You do not have to choose one or the other. Many people split it: an annuity to cover fixed costs that must be paid regardless of markets, and a RRIF for flexibility. That decision deserves a proper conversation a few years ahead of the deadline, not in December of the year you turn 71.
Common questions
RRSP or TFSA?
RRSP if you are in a high tax bracket now and expect a lower one in retirement. TFSA if the reverse, if you may need the money sooner, or if you will be receiving income-tested benefits like OAS or GIS. Most people should use both.
What is the contribution deadline?
Sixty days after year end — the first days of March — for the previous tax year.
Can I contribute to my spouse’s RRSP?
Yes. A spousal RRSP uses your contribution room and gives you the deduction, but the money belongs to your spouse. It is a useful way to even out retirement income between two people in different brackets.
I have an RRSP at my bank. Can I move it?
Usually yes, by direct transfer, which is not a withdrawal and is not taxed. Check for deferred sales charges on the existing plan first — bring me the statement.
What if I never use the room?
It carries forward indefinitely. Nothing is lost by waiting, though you do lose the years of tax-sheltered growth.
See all savings and investment options.
If you are self-employed, or you are approaching 71 and have not planned the conversion, those are the two conversations worth having sooner rather than later. Book a 15-minute conversation.