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Canada’s 2018 RRSP Deadline: Here’s Why You Shouldn’t Miss it!

Everything you need to know about contributing to your retirement plan this year.

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Canada’s RRSP deadline is right around the corner, on March 1.  If you’re planning to contribute to your Registered Retirement Savings Plan this year, the time to act is now.

You may be thinking: why is a real estate news platform reminding me about my retirement savings? 

Your RRSP is important for more than just your long-term financial security. In Canada, thanks to the Home Buyer’s Plan, you can borrow up to $25,000 from your RRSP account (interest free) for the down payment on your first home.

We’ve put together a handy guide to your deadlines, contribution limits, and other must-knows.

What exactly are RRSPs?

An RRSP (registered retirement saving plan) is a government-approved investment account which allows Canadians to save for retirement. An RRSP can take various forms including stocks, bonds, GICs, and mutual funds. RRSP’s can also act as a contribution towards buying your first home, or to fund education.

In Canada, RRSPs were introduced in 1957 as a way to make tax-deductible contributions to your savings. Since they are removed from your annual income, RRSP contributions reduce your tax obligation and allow your dividends to grow tax free.

How much can I put into my RRSP account?

The Canadian government imposes strict limits on how much of your income can be set aside as retirement savings.

  • To contribute into an RRSP account, you must have already filed your taxes on your employment income.
  • The most you can contribute to your RRSPs is 18% of your pre-tax earned income from the previous year, up to a ceiling of $26,010 (2017).
  • If you have an employer-sponsored pension plan, your limit will be lower. The pension adjustment is calculated by your employer and reported yearly to the CRA on your T4.

Can I back-track my RRSPs?

Yes, but your ceiling will be different.

To find out how much you are eligible to contribute, dig up your NOI forms from each year with unused contribution room. Your should have received your Notice of Assessment file from Canada Revenue Agency after their assessment of your tax returns.

What’s the deadline?

This year, RRSP contributions for the 2017 finaiclaare due by March 1. 

What else can my RRSP be used for?

 

Other than your retirement, RRSPs can be used to fund the following life milestones:

  • Buying your first home: You can borrow up to $25,000 from your own RRSP account, without interest, to help pay the down-payment on your first home under the Home Buyer’s Plan (HBP). If you are buying a buying a home with a partner or spouse, you can each borrow $250,000 – that’s $50,000 of your closing costs covered. As long as you put the money back in your account within 15 years, the amount will not be taxed.
  • Going back to school:You can use your RRSPs towards your education or your spouse’s education under the Lifelong Learning Plan. As with the HBP, these withdrawals are tax free.
  • Splitting your income with your spouse: Contribute to a spousal RRSP instead of a personal one, will in some cases lower your overall tax obligation as a couple. For example, if you earn significantly more than your partner, you can contribute your RRSPs into his or her account, claiming a higher tax deduction than if you would have contributed into your personal account.

How do I contribute towards my RRSP?

The first step is to schedule an appointment with your bank. Don’t leave this until the last minute, as RRSP season is a busy time for banks.If you are unable to go to your bank in time, your spouse go on your behalf so long as they have power of attorney.

If you are opening a brand new RRSP account, there are two methods you can choose from:

  1. Going in person to your bank, and opening the account with a representative.
  2. Opening an online account through your bank’s portal, or through an online bank or robo-advisor. Opening an investment account online and transferring funds into it will take a day or two.

For both, you will need your Social Insurance Number on hand.

What if I don’t have enough money saved up? 

If your contribution ceiling is higher than the amount of money you have saved up in your main account, you can consider moving money over from a more liquid account.

Otherwise, you can maximize your contribution for next year by setting up regular RRSP contributions each month.


The Canada Revenue Agency website also provides information of estimating your exact limit.

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