Frequently Asked Questions about Registered Retirement Savings Plans (RRSP)
An RRSP is a government approved program that is designed to encourage Canadians to save for their retirement by providing powerful tax reduction options. The tax breaks come in two forms. The first is that once you set up an RRSP, the financial contributions you make are deductible from your taxable income which result in IMMEDIATE TAX SAVINGS. The second is through TAX FREE COMPOUNDING. All interest or capital gains which you earn in your RRSP are tax free until you withdraw them at age 65. This compounding effect plays an exponentially important role in how quickly your retirement grows inside an RRSP vs. outside of an RRSP.
How long can I keep my RRSP limit? If I can’t afford to put money in now, does the limit keep growing?
If you are unable to use any part of the RRSP deduction limit, the amount is carried forward to the next year and added to the deduction limit for that year. Any part of your RRSP deduction limit that you do not use can be carried forward indefinitely.
How much can I contribute this year? What’s my RRSP deduction limit?
Your RRSP deduction limit is shown on your Notice of Assessment or Notice of Reassessment for the previous tax year. You can also see it online using CRA’s new “My Account” feature, or call CRA’s automated Tax Information Phone Service at 1-800-267-6999. We also can be reached at 905-525-5385 to assist you.
Can I deduct interest and fees for my RRSP?
You cannot deduct any interest paid on money you borrowed to contribute to an RRSP. You cannot deduct fees charged directly to you by the plan administrator of an RRSP or fees deducted directly from an RRSP.
Note: You may be able to deduct carrying charges and interest you paid to earn income from investments other than RRSPs. This includes fees to manage or take care of your investments other than administration fees paid for RRSPs.
I have lost money in my RRSPs that are mutual funds. Can I claim these losses on my return?
No, you cannot deduct mutual fund losses within RRSPs. All losses will be recognized upon withdrawal of your RRSP funds.
I have a lot of small RRSP plans I bought at different banks. I want to combine them into one plan at one bank. How do I do this?
Contact the financial institution you want to transfer the RRSP funds to. They will need to know which other financial institutions to contact, so you should show them your contribution receipts and RRSP statements, or simply tell them in person the information they need. They will contact the other financial institutions to do a direct transfer of the funds. You may want to contact the other financial institutions so they are aware of your intentions.