top of page


  • Writer's pictureHilary M.K. Poff

RRSP: Retirement Planning and Contribution Deadlines for 2024

When it comes to financial planning, the Federal government provides Canadians with numerous ways to save, grow money, and plan for retirement. Some can even help eliminate or minimize taxes on investment income.

One of the most popular is through a Registered Retirement Savings Plan, or RRSP. In fact, almost six million Canadians contribute to their RRSP each year.

An RRSP is a savings and investment plan that you contribute to with pre-tax dollars. You do not pay any tax on earnings generated through the RRSP until you cash in, withdraw, or receive payments from the RRSP.

Why are RRSPs so popular? It’s because there are a lot of advantages to investing with an RRSP.

Some of the advantages include:

  • Pay less tax on current income

  • Pay no tax on the money in the RRSP

  • Pay less tax on future earnings

  • Pay less tax on RRSP income when you take it out at retirement

  • You can also borrow from the RRSP to buy a first home or pay for your education

How Does an RRSP Work?

Anyone can open an RRSP so long as they are generating income and file a tax return. You can open an RRSP at a bank, credit union, mutual fund company, investment firm, and through a life insurance company. 

After you open an RRSP and begin contributing to it, you can generate income through various investment options, including stocks, bonds, mutual funds, and guaranteed investment certificates (GICs).

With an RRSP, you don’t pay any taxes on income, or capital gains, generated in the account. At least not until you start withdrawing the money.

Because an RRSP helps you save for retirement, the earlier you start saving the better. That’s because a longer horizon gives the investments and compound interest time to grow. If you’re not sure what the best way is to invest the money in the RRSP to maximize returns, speak with a certified retirement planner.

There is a limit to how long you can enjoy the benefits of an RRSP; you need to close any RRSP when you turn 71.

Before you turn 71 years of age you need to convert it to a Registered Retirement Income Fund (RRIF), purchase a payout annuity, or withdraw the funds. You don’t pay tax when you convert to a RRIF or use the money to purchase a payout annuity. You do, however, pay tax when you withdraw the funds. 

How Can an RRSP Help Reduce Taxes?

In addition to being a powerful way to save for retirement, an RRSP is also a great tax-planning tool. Canadians are taxed on their income, the more money you make, the higher the taxes. But because RRSP contributions come out of pre-taxed earnings, the tax savings can be significant.

For example, if a single person living in Toronto has an income of $100,000 and they do not contribute to an RRSP, they would pay a combined provincial and federal tax of $21,031. 

If that person made the maximum allowable contribution to their RRSP, which at 18% of their earnings would be $18,000, their taxable net income is reduced from $100,000 to $82,000, and the tax owing would be $15,580 instead of $21,031. This means they would pay $5,451 less in tax for that year. 

How much you contribute each year will depend on your income and other financial circumstances.

And, because you won’t pay tax on that income until you withdraw from the plan, ideally when you retire, the marginal tax rate when you’re not earning an income will probably be lower than it was during the contributing years. As a result, you’ll pay less tax when you withdraw it than if you had during your working years. 

What Is the 2024 Deadline for RRSP Contributions?

You can contribute to an RRSP 60 calendar days after the end of the previous year. The contribution deadline for the 2023 tax year is February 29, 2024. 

This 60-day period can give you additional time to determine how much you want to contribute to the RRSP in order to lower your taxable income. It’s also one month before the 2023 tax returns are due, which is usually April 30.  

Sharp Asset Management – Helping You Reach Your Financial Goals

RRSPs are one of the most efficient ways to save for retirement. That’s because you’re both investing tax-free and deferring taxes. If you live in Toronto or the GTA and are interested in opening an RRSP or are looking for ways to fund your retirement, speak with a private wealth management professional at Sharp Asset Management.

Sharp Asset Management is an independent asset management firm that is 100% owner-operated. All of our investment counsellors are charter financial analysts, have the highest level of achievement, and have over 10 years of experience managing portfolios. 

To learn more about how Sharp Asset Management can help you with your retirement planning, contact us today.

Featured Posts
Recent Posts
bottom of page