RRSP Rules Explained: Limits, Deadlines and Withdrawals

An RRSP gives you a deduction against this year’s income, shelters everything the account earns while the money stays inside, and taxes every dollar on the way out. Your room for 2026 is 18% of your 2025 earned income up to a ceiling of $33,810, reduced by any pension adjustment your employer reported, plus everything you never used in earlier years. The deadline to contribute for the 2026 tax year is March 1, 2027. Withdrawals are taxable and the room does not come back.

That last sentence is where most of the money is lost, and most of this page is about the mechanics behind it.

Figures current as of August 30, 2026. Contribution ceilings and tax brackets are indexed and change annually.

A disagreement between two CRA pages, flagged

The CRA’s Home Buyers’ Plan page, last updated February 17, 2026, says the temporary HBP repayment relief “was extended for participants making a first withdrawal between January 1, 2026, and December 31, 2028.”

The CRA’s HBP repayment page, last updated January 20, 2026, and Guide T4040 for the 2025 tax year both describe the relief as applying only to first withdrawals between January 1, 2022, and December 31, 2025.

The two are not reconcilable as written. The more recently updated page describes an extension the older pages predate, which is the likely explanation, but anyone making a first HBP withdrawal in 2026 or later should confirm their own repayment start year against their CRA account rather than a general page. Both sources are cited above.

The three numbers on your notice of assessment

People talk about “RRSP contribution room” as though it were one figure. Your notice of assessment carries at least three, and confusing them is the single most common source of an unwelcome letter from the CRA.

Your RRSP deduction limit is the CRA’s own term and the one that appears on the notice. It is the maximum you can deduct on line 20800 for the year, covering contributions to your own RRSP, PRPP or SPP and to your spouse’s or common-law partner’s RRSP or SPP combined.

Unused RRSP contributions previously reported and available to deduct is money that is already sitting inside the plan but has never been claimed as a deduction. It is not room. It is a balance.

Your deduction limit plus $2,000 is the practical ceiling on what you can have in the plan undeducted before the penalty tax starts. The $2,000 is a cushion, not room, and you do not get a deduction for it.

A reader who sees a $40,000 deduction limit and $18,000 of unused contributions has $40,000 of deducting capacity and $18,000 of it already funded. Contributing another $40,000 would put them roughly $18,000 over.

How the deduction limit is built

The CRA sets out the calculation on How contributions affect your RRSP deduction limit:

1. Your unused RRSP deduction room at the end of the preceding year, plus 2. The lesser of 18% of your earned income in the previous year and the annual RRSP dollar limit, minus 3. Your pension adjustment (PA) or your prescribed amount for connected persons, plus 4. Your pension adjustment reversal (PAR), minus 5. Your net past service pension adjustment (PSPA).

Unused deduction room accumulated after 1990 carries forward indefinitely, which Guide T4040 states directly. There is no expiry.

What counts as earned income

Chart 3 of Guide T4040 sets out the full computation. Earned income is built from employment income, net self-employment income, net rental income from real property, royalties on a work you authored or invented, net research grants, supplementary unemployment benefit and Wage Earner Protection Program payments, CPP or QPP disability payments, and taxable support payments received. Current-year business losses, rental losses and deductible support payments are subtracted.

What is conspicuously absent matters more. Interest, dividends, capital gains, pension income, OAS and CPP retirement benefits do not create RRSP room. A retiree living on investment income and a pension generates no new room at all, which is a large part of why the account is front-loaded toward working years.

The pension adjustment, and why members of a workplace pension have so little room

If you belong to a registered pension plan or a deferred profit sharing plan, your employer reports a pension adjustment in box 52 of your T4 or box 034 of your T4A. Guide T4040 is precise about what it does: your PA for a year reduces your RRSP deduction limit for the following year, and it does not affect your income.

The logic is that the government caps total tax-assisted retirement saving across all vehicles. A defined benefit member accruing a valuable pension has already used most of the annual allowance, so their remaining RRSP room is small. Someone on a $120,000 salary with a generous DB plan may see a few thousand dollars of new room rather than the $21,600 that 18% would suggest. Nothing has gone wrong.

If you leave the plan before your benefits fully vest, a pension adjustment reversal on a T10 slip restores room that the PA took away.

The RRSP dollar ceiling, year by year

The annual ceiling caps the 18% calculation. It equals the previous year’s money purchase limit, which is why the 2026 RRSP ceiling of $33,810 matches the 2025 MP limit exactly.

Tax year	RRSP dollar ceiling	Prior-year earned income needed to reach it
2021	$27,830	$154,611
2022	$29,210	$162,278
2023	$30,780	$171,000
2024	$31,560	$175,333
2025	$32,490	$180,500
2026	$33,810	$187,833
2027	$35,390	$196,611

Ceilings from CRA, MP, DB, RRSP, DPSP, ALDA, TFSA limits, YMPE and the YAMPE. The right-hand column is the ceiling divided by 0.18 and is arithmetic, not a CRA figure. Below that income level the 18% calculation binds and the ceiling is irrelevant.

If you want the number that actually applies to you rather than the theoretical maximum, our RRSP contribution room calculator works through the pension adjustment and carry-forward, and the authoritative figure is always the RRSP Deduction Limit Statement on your latest notice of assessment or in your CRA account.

Contributing and deducting are two separate decisions

This is the most underused feature of the account, and it is the one that most reliably turns into real money.

You must contribute by the deadline to get the money working. You do not have to deduct it in the same year. Guide T4040 says so plainly: you do not have to claim the full amount of your deductible contributions for a year, and the contributions you do not claim may be carried forward and claimed for future years when you may be subject to a higher tax rate.

The deduction is worth your marginal rate in the year you claim it. Claiming it in a low-income year burns it at a low rate. Holding it until a high-income year is worth more, and the money compounds inside the plan the whole time either way.

Worked example, Ontario, 2026 brackets

Take an Ontario resident with $75,000 of taxable income in 2026 who contributes $10,000, and who expects to be at $140,000 of taxable income after a promotion three years from now.

At $75,000, the deduction sits entirely inside the federal 20.5% band and the Ontario 9.15% band, a combined marginal rate of 29.65%. Deducting the whole $10,000 in 2026 is worth $2,965.

At $140,000, the deduction sits entirely inside the federal 26% band and the Ontario 11.16% band, a combined marginal rate of 37.16%. Deducting the same $10,000 then is worth $3,716.

Same $10,000. Same three years of tax-sheltered growth, because the money went in either way. $751 more, about 25% more deduction value, purely from choosing the year.

Rates from CRA, Current year tax rates and income brackets (2026). The calculation uses statutory bracket rates only. It excludes the Ontario surtax and any income-tested credit clawbacks, both of which would widen the gap rather than narrow it. It also assumes 2026 brackets, which are indexed annually, so the real comparison depends on where the later income falls relative to the bracket in that year. Our RRSP tax refund calculator runs the version with your own province and income.

The reporting trap that voids the whole strategy

Deferring the deduction only works if you report the contribution. Guide T4040 is emphatic: include every contribution made in the reporting window on Schedule 7 even if you are not deducting or designating it, because otherwise the CRA may reduce or disallow your claim for those contributions in a future year.

An undeclared contribution is not a stored deduction. It is a contribution the CRA has no record of, sitting in a plan, still counting against your limit for penalty purposes but potentially unusable as a deduction later. File the Schedule 7.

The first 60 days, and why the deadline moves

Contributions made in the first 60 days of a calendar year can be deducted on either the previous year’s return or the current one. The window does not run from January 1. Guide T4040 defines the 2025 window as March 4, 2025 to March 2, 2026, which is the day after the prior year’s deadline through the current deadline.

For the 2026 tax year, the deadline is March 1, 2027. The 60th day of 2027 is March 1, and March 1, 2027 falls on a Monday, so it lands on a business day and stands.

The date moves when the 60th day falls on a weekend. That is exactly why the deadline for the 2025 tax year was March 2, 2026: March 1, 2026 was a Sunday. Do not assume March 1 every year, and do not assume the shifted date carries forward.

The filing deadline for the 2026 return is April 30, 2027, a Friday. It is a separate date. Contributing on April 15 does not help your 2026 return.

Related: our reference on the 2026 TFSA and RRSP contribution limits covers both accounts side by side.

What is and is not a contribution

Some money that arrives in your RRSP is not a contribution and does not consume your deduction limit. The distinction is not cosmetic.

Direct transfers do not affect your deduction limit. The CRA states this on both Transferring and the contributions page. Moving an RRSP from one institution to another, or transferring the eligible portion of a retiring allowance, or rolling in an RPP lump sum, does not use room. You must ask the payer to transfer the funds directly. Taking the money personally and re-depositing it turns a transfer into a contribution and can create an over-contribution out of nothing.

HBP and LLP repayments are not contributions. The CRA is explicit: repayments do not affect your RRSP deduction limit, you can make them even if your limit is zero, and you cannot claim a deduction for an amount designated as a repayment.

A contribution in kind is still a contribution. Moving shares from a taxable account into your RRSP is a disposition at fair market value for tax purposes and a contribution of that value. A gain is taxable; a loss on a transfer into a registered plan is denied.

An FHSA-to-RRSP transfer does not use RRSP room. Guide T4040, Chapter 10, states you can transfer property from your FHSA to your RRSP or RRIF without immediate tax consequences as long as it is a direct transfer and you do not have an excess FHSA amount. It works in the other direction too, but the transfer from RRSP to FHSA does not restore your RRSP deduction room. The FHSA explainer covers that side in detail, and our comparison of which account comes first sets out the sequencing question.

Not deductible: administration fees paid for the plan, brokerage commissions inside a trusteed RRSP, interest on money borrowed to contribute, capital losses inside the plan, and employer PRPP contributions.

Over-contribution: the $2,000 cushion and the 1% monthly tax

You are allowed a lifetime cushion of $2,000 above your deduction limit before the penalty tax applies, and only if you were 18 or older at some point in the preceding year. Beyond that cushion, the CRA charges 1% per month on the excess.

Note what the tax applies to: your unused contributions that exceed your deduction limit by more than $2,000. It is a monthly charge on a standing balance, so it accrues for as long as the excess sits there.

What it costs

Someone $10,000 over their deduction limit has $8,000 subject to the tax after the cushion. That is $80 per month, or $960 over a full year, on money that is also not producing a deduction.

The form, and the deadline people miss

You report it on Form T1-OVP (or T1-OVP-S, the simplified version, if all the excess arose from ordinary contributions rather than mandatory group plan contributions). The return and payment are due no later than 90 days after the end of the year in which you had the excess contributions.

Miss that and the late-filing penalty is 5% of the balance owing plus 1% of the balance for each month the return is late, to a maximum of 12 months, and interest compounds daily starting on the 91st day of the following year.

Getting out of it

Two routes exist. You may not have to pay the tax at all if you withdrew the excess before the end of the month in which the excess contribution was made. And the CRA may waive or cancel the tax if the excess arose from a reasonable error and you are taking reasonable steps to eliminate it, requested on Form RC2503.

If you are withdrawing an undeducted contribution, Form T3012A lets you take it out without tax withheld, provided the conditions on the CRA’s Withdrawing the unused contributions page are met. Without the approved T3012A the institution must withhold, and you claim an offsetting deduction on line 23200 using Form T746.

One warning from the CRA’s own page: RRSP receipts and T4RSP slips do not show the exact months of contributions and withdrawals, and the CRA needs those months. If you cannot supply them, the agency may assess your T1-OVP on its own defaults, which place first-60-day contributions in January, all other contributions in March, and every withdrawal in December. That default ordering maximises the months your excess is deemed to have been outstanding.

Withdrawals: why they cost more than people expect

Three things happen when you take money out of an RRSP, and only the first is obvious.

1. Tax is withheld immediately

Amount withdrawn	Withheld, outside Quebec	Withheld, Quebec (federal portion)
Up to $5,000	10%	5%
Over $5,000 up to $15,000	20%	10%
Over $15,000	30%	15%
Any amount, non-resident of Canada	25% unless reduced by a treaty	25% unless reduced by a treaty

Source: CRA, Tax rates on withdrawals. Quebec residents also have provincial tax withheld in addition to the federal portion shown.

The rate applies to the whole withdrawal, not marginally. A $16,000 withdrawal has 30% withheld on all $16,000, not on the $1,000 above the threshold.

2. The withholding is a down payment, not the tax

The CRA says it directly: the tax withheld may not always be enough to account for the tax you owe at your bracket, and you may have to pay more when you include the withdrawal on your return. The withdrawal goes on line 12900 as ordinary income and the tax withheld is claimed on line 43700.

Take an Ontario resident with $130,000 of taxable income who withdraws $20,000. The whole withdrawal sits in the federal 26% and Ontario 11.16% bands, a combined 37.16%.

• Withheld at source: 30% of $20,000 = $6,000
• Actual tax on the withdrawal: 37.16% of $20,000 = $7,432
• Still owing at filing: $1,432

The smaller the withdrawal, the worse the gap looks in percentage terms. The same person taking $5,000 has only $500 withheld but owes $1,858, leaving $1,358 to find at filing time on a $5,000 withdrawal. Splitting a withdrawal into several small ones lowers the withholding. It does not lower the tax. It only moves the bill to April.

3. The room is gone

RRSP deduction room is created by earned income and by carry-forward. Nothing in the CRA’s Chart 3 calculation adds room back when you withdraw. This is the sharpest structural difference between an RRSP and a TFSA, where withdrawals are added back to your room at the start of the following calendar year. Withdraw $30,000 from an RRSP at 40 and you have permanently retired $30,000 of lifetime tax-sheltered capacity. The TFSA explainer covers the contrast from the other side.

The two exceptions where a withdrawal is not taxed on the way out are the Home Buyers’ Plan and the Lifelong Learning Plan, and both are loans from yourself with repayment schedules attached.

The Home Buyers’ Plan

The HBP lets you withdraw from your RRSPs to buy or build a qualifying home for yourself or for a specified disabled person. The current withdrawal limit is $60,000. Nothing is withheld and nothing is added to your income, provided you qualify.

You do not have to choose between the HBP and an FHSA

A great deal of published advice says you must pick one. That is wrong, and the CRA says so on the Home Buyers’ Plan page itself: you can withdraw amounts from your RRSP under the HBP and make a qualifying withdrawal from your FHSA for the same qualifying home, as long as you meet all of the conditions of each at the time of each withdrawal.

The “choose one” claim traces back to how the FHSA was originally proposed rather than to how it was enacted. Cite the rule, not the proposal. For a buyer with both accounts, $60,000 from the HBP and a full FHSA withdrawal are additive, and only the HBP portion has to be repaid. The FHSA explainer covers the qualifying-withdrawal conditions on that side.

Who qualifies as a first-time buyer

The CRA’s own guidance on common HBP mistakes is unusually direct, and its examples are worth reading in full. Two points catch people:

You are not a first-time buyer if you lived in a home you owned at any time in the current calendar year or the previous four calendar years. The CRA’s example: Sofia sold her home in 2022 and rented afterward. Withdrawing under the HBP in 2025 does not work, because she lived in a home she owned within the previous four years. She would have had to wait until 2027.

Your spouse’s or partner’s ownership counts against you even if you never owned anything. The CRA’s example: Jaspreet has never owned a home, but she lived in a condo her common-law partner owns. She is not a first-time buyer.

You must have repaid any previous HBP balance before making a new withdrawal. In the CRA’s example, Alex still owed $10,000 from a 2015 withdrawal, so his new $60,000 withdrawal was treated as an ordinary taxable RRSP withdrawal in full.

In every one of those cases, the consequence is the same: the withdrawal is added to taxable income for the year, possibly pushing the person into a higher bracket, the room is not restored unless they have fresh contribution capacity, and penalties and interest may follow if the error is not caught.

The 89-day rule

Guide T4040 warns that if you contribute to an RRSP and then withdraw from that same RRSP under the HBP or LLP within 89 days, all or part of that contribution may not be deductible for any year. Contributing in February to fund a March HBP withdrawal can cost you the deduction entirely. The same applies to contributions made to a spouse’s RRSP before their withdrawal.

Repayment

You have 15 years to repay. The annual minimum is your HBP balance divided by the number of years remaining in the repayment period, so a full $60,000 withdrawal repaid on schedule is $4,000 per year.

When repayment starts depends on when you first withdrew:

• First withdrawal before January 1, 2022: repayment starts the second year after the withdrawal year.
• First withdrawal in the relief window: repayment starts the fifth year after the withdrawal year. A 2026 first withdrawal means a first repayment year of 2031, per the CRA’s HBP page. See the flagged discrepancy at the top of this article about how far that window extends.

To repay, contribute to your RRSP, PRPP or SPP in the repayment year or the first 60 days after it, then designate the amount on line 24600 of Schedule 7. You cannot designate contributions made to a spouse’s plan, and you cannot deduct what you designate.

What happens when you miss a repayment

Nothing dramatic. The shortfall between what you repaid and the minimum required is added to your income on line 12900 as RRSP income for that year, and your HBP balance is reduced by that amount.

That is the trade being made, and it is worth naming honestly: a missed repayment is not a penalty, it is a taxable withdrawal you did not choose to time. You lose the tax deferral on that slice at whatever your marginal rate happens to be that year, and you still have to make the remaining annual repayments until the balance is zero.

Repaying more than the minimum reduces the minimums for later years, because the balance is redivided over the years remaining.

At 71, on death, and on leaving Canada

You cannot contribute to an RRSP after the end of the year you turn 71, so you cannot repay an HBP after that either. In the year you turn 71 you can repay the balance in full, repay part of it, or repay nothing. Whatever balance remains is divided by the years left in the repayment period and included in income on line 12900 each year until it is exhausted.

On death, the legal representative generally includes the remaining HBP balance in the deceased’s income for the year of death. If there is a surviving spouse or common-law partner resident in Canada, they and the legal representative can jointly elect on Form RC98 to have the survivor continue the repayments instead, which cancels that income inclusion.

If you become a non-resident after buying the home, you must either repay the balance by the earlier of your filing date for the year you became a non-resident or 60 days after you became one, or include the balance in income for that year.

The Lifelong Learning Plan

The LLP works the same way for education. Up to $10,000 in a calendar year, up to $20,000 in total per participation period, withdrawn tax-free from your RRSPs to finance full-time training or education for you or your spouse or common-law partner.

It does not cover your children. The CRA’s Participating in the Lifelong Learning Plan page is explicit that you cannot use the LLP to fund your children’s training or education, or your spouse’s or common-law partner’s children’s. That is what an RESP is for.

Two eligibility limits catch people. You must be a resident of Canada when you receive the funds, and you cannot participate after the end of the year you turn 71. Locked-in RRSPs cannot be used. The CRA notes that plans created from pension funds and governed by provincial or federal pension legislation do not permit LLP withdrawals, which rules out the account many people assume is their largest.

The excess rules are asymmetric and worth knowing. If you withdraw more than the $10,000 annual limit, the excess is included in your income for the year of the withdrawal, and it does not reduce your $20,000 total. If you exceed the $20,000 total, the excess is included in income in the year you cross it. Tax is withheld on the part of a withdrawal that exceeds the annual limit.

Repayment is over 10 years, at 1/10 of the total withdrawn per year. A full $20,000 participation repays at $2,000 per year. Any amount you do not repay when it is due is included in your income for the year it was due, the same treatment as a missed HBP payment. Repayments must be designated on Schedule 7, are required even if your RRSP deduction limit is zero or negative, and cannot be deducted.

When repayment starts depends on whether the student stays enrolled. The CRA determines the start by checking whether the LLP student is a qualifying student for at least three months in the year. If the student fails that test two years running, repayment usually starts in the second of those years. If the student keeps qualifying every year, repayment starts in the fifth year after the first withdrawal.

You can keep making withdrawals until the earlier of the start of your repayment period and January of the fourth calendar year after your first withdrawal. You can then participate again, from the year after you bring your LLP balance to zero, with a fresh $20,000. There is no lifetime cap on the number of participations.

What you can hold inside

An RRSP must limit itself to qualified investments. Income Tax Folio S3-F10-C1 lists the common types:

• money, GICs and other deposits
• most securities listed on a designated stock exchange, including shares, warrants, options, and units of exchange-traded funds and REITs
• mutual funds and segregated funds
• Canada Savings Bonds and provincial savings bonds
• debt obligations of a corporation listed on a designated stock exchange
• debt obligations with an investment grade rating
• insured mortgages or hypothecs

Two practical notes from the folio itself. The CRA does not maintain a master list of specific investments and will not rule on whether a particular holding qualifies except in an advance ruling or an audit. And many institutions apply internal policies narrower than the law, which they are entitled to do.

The penalty for holding the wrong thing

Guide T4040, Chapter 4, sets out consequences severe enough to make the question worth asking before you buy:

• Non-qualified investment: a tax equal to 50% of the fair market value of the property when it was acquired or when it became non-qualified, reported on Form RC339 and due by June 30 following the calendar year. The plan itself is also taxable on income the non-qualified investment earns.
• Prohibited investment: the same 50% tax, plus a 100% advantage tax on income and capital gains from it. Something that is both is treated as prohibited only.
• The 50% tax is refundable if the investment is disposed of, or ceases to be non-qualified or prohibited, before the end of the calendar year after the year the tax arose. No refund is issued if it is reasonable to expect you knew, or should have known, that the investment was or would become non-qualified or prohibited. The 100% advantage tax is never refundable.

For most self-directed investors this is a non-issue, since Canadian and US listed equities and ETFs are squarely qualified. Our lists of RRSP stocks for the long term, Canadian dividend stocks and ETFs all deal in listed securities.

US dividends: the RRSP advantage that the TFSA does not have

This is one of the few genuine, quantifiable structural edges the RRSP has, and it is widely half-understood.

Article XXI(2)(a) of the Canada-United States tax convention exempts income referred to in the Dividends and Interest articles when it is derived by “a trust, company, organization or other arrangement that is a resident of a Contracting State, generally exempt from income taxation in a taxable year in that State and operated exclusively to administer or provide pension, retirement or employee benefits.”

The IRS applied that provision to RRSPs directly in Private Letter Ruling 200810013, issued December 6, 2007: “An RRSP is a trust, company, organization or other arrangement described in Article XXI(2)(a) of the Treaty. Consequently, dividends and interest derived by an RRSP will be exempt from U.S. income tax pursuant to Article XXI(2)(a) of the Treaty.” The ruling reached the same conclusion for RPPs, RRIFs and DPSPs.

The practical effect: US dividends paid on US-listed shares held directly in an RRSP arrive without the 15% US withholding that a Canadian resident would otherwise face. In a TFSA the withholding applies and cannot be recovered, because the tax is levied on income that never enters your Canadian return, so there is no Canadian tax against which to claim a foreign tax credit.

Three honest caveats, because this is the part that gets oversold:

1. A private letter ruling binds the IRS only as to the taxpayer who requested it and, under the US Internal Revenue Code, may not be cited as precedent. It is a clear statement of the IRS’s reading of the article, not a regulation. 2. The exemption attaches to income derived by the plan. Where a Canadian-listed fund holds the US securities, the US tax is applied to the fund, before the distribution ever reaches your RRSP. Holding a Canadian-domiciled US equity ETF inside an RRSP does not generally capture the exemption; holding the US-listed shares or a US-domiciled ETF directly does. This follows from the wording of the article rather than from a CRA or IRS statement addressing fund structures, so treat it as a structural reading and confirm the specifics of any particular fund. 3. No primary source in the CRA or treaty materials states in so many words that a TFSA falls outside Article XXI(2)(a). The conclusion rests on the article’s requirement that the arrangement be operated exclusively to administer or provide pension, retirement or employee benefits, which a general-purpose savings account is not.

The exemption covers dividends and interest. It does not exempt US estate tax exposure, which is a separate regime.

Spousal RRSPs and the three-year attribution rule

A spousal RRSP is one you contribute to but your spouse or common-law partner owns as annuitant. You take the deduction against your deduction limit. They own the money and will report the income when it comes out.

The CRA’s Setting up an RRSP page describes the point of it: the contributor gets the near-term deduction, and the annuitant, likely in a lower bracket in retirement, reports the income.

Two age details matter. Your contributions to a spousal plan come out of your own limit, not theirs. And you can keep contributing to a spousal RRSP until the end of the year they turn 71, which means someone past their own 71st year with a younger spouse can still get a deduction.

The attribution rule

Here is the trap. If you contributed to any spousal RRSP in the year of a withdrawal or in either of the two preceding years, all or part of what your spouse withdraws is included in your income, not theirs. The amount is worked out on Form T2205.

The CRA’s own tip on the withdrawing from spousal RRSPs page: to be sure nothing is attributed back to you, make sure you have not contributed to any of your spouse’s RRSPs in the year of the withdrawal or in either of the two preceding years.

Note the plural. The rule looks at contributions to any spousal RRSP, not the specific account being drawn on. Contributing to spousal plan A in December and withdrawing from spousal plan B in January does not escape it.

The attribution rule reaches beyond simple withdrawals. It also catches commutation payments, deregistrations, RRIF payments above the minimum from a spousal RRIF, and amounts transferred from a spousal RRSP to an FHSA that are deemed to be a taxable withdrawal.

One practical consequence: a couple planning to draw on a spousal RRSP should stop contributing to it three calendar years before the first withdrawal. The tax slip will usually be issued in the annuitant’s name regardless, and Form T2205 sorts out who actually reports what.

Age 71: the conversion deadline

December 31 of the year you turn 71 is the last day you can contribute to your own RRSP. Not your 71st birthday, and not the year you turn 72. The whole calendar year in which you turn 71 is available, so someone turning 71 in November still has until December 31 of that year.

In that year, the CRA gives you three options for your own RRSPs:

1. Withdraw them. Tax is withheld and the full amount is income in that year. Almost nobody does this deliberately. 2. Transfer to a RRIF. No tax is withheld on a direct transfer and there are no immediate tax implications. 3. Buy an annuity. Same treatment on the transfer.

You can do more than one. Nothing forces an all-or-nothing choice.

If you do nothing at all, the plan de-registers and the entire fair market value becomes income in a single year, which is the worst outcome the rules permit.

The RRIF minimum

Starting in the year after the year you establish the RRIF, a minimum amount must be paid to you each year. The carrier calculates it from your age at the beginning of the year, multiplied by the fund’s value at the start of the year. You can take more; you cannot take less.

The factors are set out in section 7308(4) of the Income Tax Regulations. Below age 71 the factor is 1/(90 − age).

Age at start of year	Minimum factor	On a $500,000 RRIF
65	4.00% (1/(90−65))	$20,000
71	5.28%	$26,400
75	5.82%	$29,100
80	6.82%	$34,100
85	8.51%	$42,550
90	11.92%	$59,600
95 or older	20.00%	$100,000

Factors from Income Tax Regulations, section 7308(4), current to June 21, 2026. Dollar figures are the factor applied to a $500,000 opening balance and are illustrative arithmetic.

Two mechanics that matter more than the table:

No tax is withheld on the minimum amount. Guide T4040, Chart 5, answers “Will tax be withheld?” with No for the RRIF minimum and Yes for any excess above it. The minimum is still fully taxable on your return. It simply arrives without an instalment attached, which means a retiree living on RRIF minimums can face an unexpectedly large balance at filing time unless they request voluntary withholding.

You can base the minimum on your spouse’s age, and only once. The CRA and Guide T4040 both state that you must select this option when filling out the original RRIF application form, and once made the election cannot be changed. Using a younger spouse’s age lowers the required withdrawal for life. Getting that wrong at account opening is not fixable later.

What happens on death

The default outcome is expensive. The exceptions are what planning is for.

The default. For an unmatured RRSP with no qualifying survivor involved, the fair market value of everything the plan held at the date of death is reported in box 34 of a T4RSP slip and included in income on the deceased’s final return. A $600,000 RRSP becomes $600,000 of income in one tax year, most of it in the top bracket.

The spousal rollover. If your spouse or common-law partner is named as beneficiary in the RRSP contract or in your will, and all of the property is paid to them and directly transferred to their RRSP by the end of the year following the year of death, they claim an offsetting deduction on line 20800 and nothing is taxed at that point. A direct transfer to their RRIF or to an issuer to buy an eligible annuity gets the same result with the deduction on line 23200. The survivor must be 71 or younger at the end of the year the transfer is made in order to use an RRSP.

Financially dependent children and grandchildren. A “qualifying survivor” is the spouse or common-law partner or a financially dependent child or grandchild. Information Sheet RC4177 defines financial dependence: the child ordinarily resided with and depended on the annuitant, and their net income for the previous year was less than the unreduced maximum basic personal amount, or, where the dependence was due to mental or physical infirmity, was no more than the basic personal amount plus the disability amount. A child away at school still counts as residing with the annuitant.

The transfer options differ sharply by infirmity:

• A child or grandchild who was dependent because of an impairment in physical or mental functions can roll the amount into an RRSP, PRPP, SPP, RRIF, RDSP or an annuity.
• A child or grandchild who was dependent but not because of an impairment gets one option only: a term annuity, with payments running for no more than 18 years minus the child’s age when the annuity was bought, starting no later than one year after purchase.

Amounts paid to the estate. These can still qualify as a refund of premiums if a qualifying survivor is a beneficiary of the estate and the legal representative and that survivor jointly file Form T2019 to designate the amounts.

A falling market between death and distribution. If the plan’s value drops between the date of death and the final distribution, the difference can be deducted on the deceased’s final return on line 23200, usually via a reassessment request accompanied by Form RC249. The deduction is generally not available if the plan held a non-qualified investment after death or if the final distribution happens after the end of the year following the year of death.

Contributions after death. No one can contribute to a deceased person’s RRSP. But the legal representative can contribute to the surviving spouse’s RRSP or SPP in the year of death or the first 60 days after that year, and claim the deduction on the deceased’s final return up to their deduction limit for the year of death. Guide T4040’s example: Jacques died in August 2025 with a $7,000 deduction limit and no contributions made; his legal representative can put $7,000 into his spouse Claire’s RRSP and claim the deduction on Jacques’s final return.

The two mistakes that cost the most here are naming the estate rather than the spouse as beneficiary, which forces the money through probate and complicates the rollover, and forgetting that a beneficiary designation on an old plan document outranks a newer will in most provinces.

Residency, and leaving Canada

An RRSP survives emigration. On dispositions of property for emigrants, the CRA lists registered retirement savings plans, RRIFs, pension plans, TFSAs and other registered arrangements among the exceptions to the deemed disposition that triggers departure tax. They are also excluded from Form T1161, the list of properties an emigrant must file.

You can leave the account in place. What changes:

• Withdrawals are subject to 25% Part XIII withholding, unless a tax treaty reduces the rate. Under the Canada-US convention, periodic pension payments are capped at 15%, while a lump sum is not a periodic payment and does not get that rate.
• No new room accrues without Canadian earned income.
• HBP and LLP balances have their own non-resident rules, described above for the HBP.
• Some institutions will not accept trades in a registered account from a non-resident, which is a firm policy rather than a tax rule.

Interaction with income-tested benefits

The RRSP moves your net income, and net income is what income-tested benefits and credits are calculated from. That cuts both ways.

A deduction lowers net income, which can increase the Canada Child Benefit, the GST/HST credit and provincial benefits in the same year. For a family near a clawback threshold, the benefit increase can be worth more than the tax saving itself.

A withdrawal raises net income, which does the reverse, and the most expensive version of this arrives in retirement. The Old Age Security recovery tax requires you to repay 15% of the amount by which your net world income exceeds the threshold. For the 2026 income year, that minimum threshold is $95,323, and it governs OAS payments from July 2027 to June 2028.

A retiree at $115,000 of net income repays 15% of $19,677, or $2,951.55 of OAS. Layer that on top of a 37% marginal rate and the effective cost of the last dollars withdrawn is far above the headline bracket. This is the argument for drawing an RRSP down in the years between retirement and 71, before the RRIF minimum and OAS arrive together and the withdrawal stops being optional.

The Guaranteed Income Supplement is more punitive still, reducing at roughly 50 cents per dollar of other income, which is why RRSPs are often a poor fit for someone whose retirement income will be low enough to qualify for GIS. A TFSA does not touch net income at all and does not affect any of these.

The mistakes people actually make

Drawn from the CRA’s own guidance rather than invented:

1. Treating the deduction limit as the contribution limit and forgetting the unused contributions line. Three numbers, not one. 2. Not filing Schedule 7 for a contribution you are not deducting yet. Guide T4040 warns this can get the deduction reduced or disallowed later. 3. Assuming the deadline is always March 1. It moved to March 2 for the 2025 tax year because March 1, 2026 fell on a Sunday. 4. Withdrawing and expecting the room back. It does not come back. 5. Taking money personally to move it between institutions. A transfer is only a transfer if it is made directly by the payer. 6. Contributing within 89 days of an HBP or LLP withdrawal. The contribution may be permanently non-deductible. 7. Making a new HBP withdrawal with an old balance outstanding. The CRA’s Alex example: the entire new $60,000 became taxable income. 8. Believing you must choose between the HBP and an FHSA for the same home. The CRA says you can use both. 9. Assuming a locked-in RRSP can fund an LLP withdrawal. It cannot. 10. Contributing to a spousal RRSP inside the three-year window before a withdrawal. The income attributes back to the contributor. 11. Missing the once-only election to use a younger spouse’s age for the RRIF minimum. It must be made on the original RRIF application and cannot be changed. 12. Leaving the estate as the RRSP beneficiary when a spouse is available for the rollover. 13. Assuming the RRIF minimum has tax withheld. It does not, and the bill arrives at filing.

FAQ

What is the RRSP contribution limit for 2026? Your 2026 limit is 18% of your 2025 earned income, capped at $33,810, minus your 2025 pension adjustment, plus any unused deduction room carried forward from earlier years. The $33,810 is the ceiling, not the amount most people get. The exact figure is on your notice of assessment.

What is the RRSP deadline for the 2026 tax year? March 1, 2027. Contributions made in the first 60 days of 2027 can be deducted on either the 2026 or the 2027 return. March 1, 2027 is a Monday, so the date stands. The deadline to file the 2026 return is April 30, 2027.

What is the difference between contribution room and deduction limit? The CRA’s official term is “RRSP deduction limit,” the maximum you can deduct on line 20800. You may contribute up to that limit plus $2,000 without triggering the penalty tax, but the extra $2,000 is not deductible. Separately, “unused RRSP contributions” is money already in the plan that you have never deducted. All three appear on the notice of assessment.

Can I contribute this year and claim the deduction later? Yes, and indefinitely. Guide T4040 states you do not have to claim the full amount for a year and may carry the unclaimed portion forward to a year when you are in a higher bracket. You must still report the contribution on Schedule 7 in the year you make it, or the CRA may disallow the deduction later.

How much can I over-contribute to an RRSP? $2,000 over your deduction limit, once in your lifetime, and only if you were 18 or older at some point in the preceding year. Above that, the tax is 1% per month on the excess, reported on Form T1-OVP or T1-OVP-S and due 90 days after the year ends.

How much can I withdraw from my RRSP for a home? Up to $60,000 under the Home Buyers’ Plan, repayable over 15 years. You must be a first-time buyer, which means you did not live in a home you or your spouse owned at any time in the current calendar year or the previous four.

Can I use the Home Buyers’ Plan and an FHSA for the same home? Yes. The CRA states you can make an HBP withdrawal and a qualifying FHSA withdrawal for the same qualifying home, provided you meet the conditions of each at the time of each withdrawal. Advice telling you to choose one is out of date. Only the HBP portion has to be repaid.

What happens if I miss an HBP repayment? The shortfall is added to your income on line 12900 for that year and your HBP balance drops by the same amount. There is no separate penalty, but you lose the deferral on that slice and you still owe the remaining annual repayments.

Do I have to close my RRSP at 71? You must convert it by December 31 of the year you turn 71, by withdrawing it, transferring it to a RRIF, or buying an annuity. Most people transfer to a RRIF, which is not a closure and lets the investments continue. Doing nothing de-registers the plan and makes the whole balance taxable at once.

Is tax withheld on RRIF payments? Not on the minimum amount. Guide T4040 shows the minimum as “No” and any excess above it as “Yes.” The minimum is fully taxable on your return regardless, so the tax arrives at filing rather than at source.

Are US dividends taxed in an RRSP? The IRS has ruled that dividends and interest derived by an RRSP are exempt from US income tax under Article XXI(2)(a) of the Canada-US treaty. The same income in a TFSA generally suffers 15% US withholding that cannot be recovered. The exemption applies to income derived by the plan, so it works for directly held US-listed securities rather than for a Canadian-listed fund that itself holds them.

What happens to my RRSP when I die? By default the full value is income on your final return. If your spouse or common-law partner is the named beneficiary and the property is directly transferred to their RRSP or RRIF by the end of the year following your death, no tax arises at that point. A financially dependent child or grandchild can also qualify, with far wider options if the dependence is due to an impairment.

Does an RRSP withdrawal restore my contribution room? No. Unlike a TFSA, RRSP room is created only by earned income and carry-forward. A withdrawal permanently retires that capacity, apart from HBP and LLP amounts you repay.