RRSP Deadline: Things to Remember

The deadline to contribute to a Registered Retirement Savings Plan (RRSP) is on March 1. There are a few things to keep in mind ahead of the deadline – whether you’re opening an RRSP, contributing to one, withdrawing funds, or closing one up.

Opening an RRSP

An RRSP is an account, registered with the Canada Revenue Agency (CRA), which allows you to shelter your investment earnings and defer taxes until you begin to make withdrawals in your retirement years.

There are two different types of RRSP accounts that you can open on your own: individual and spousal. There are also Group RRSPs that some employers provide as a benefit. Talk to your employer if you wish to know more about your company’s plan.

The fees you pay may vary depending on the firm and/or registered investment advisor you choose to manage your account. A registered investment advisor can help you set up your RRSP account.

Contributing to an RRSP

There is a yearly deadline for contributions to an RRSP account. The contribution deadline for RRSPs is 60 days after the end of the calendar year – usually March 1 or February 29 during a leap year.

There are limits on what you can contribute to your RRSP each year. If you are a member of a pension plan, you will need to factor in your pension adjustment. CRA also sets an annual RRSP limit.

You can also contribute to a spousal RRSP. However, the amount that you contribute will reduce your RRSP deduction limit.

Withdrawing Funds

There are tax consequences for taking money out of your RRSP before you retire, and you will lose the contribution room you used when you put the money into the account.

If you borrow from your RRSP to go to school or purchase a home, you can avoid tax consequences if you pay the money back within a specified amount of time.

Closing an RRSP

You must close an RRSP account by the end of the calendar year in which you turn 71. You have until the end of the year to take your savings in cash or convert it into a stream of income. If you choose to turn it into retirement income, you have two options:

  1. Convert your RRSP into a Registered Retirement Income Fund (RRIF).
  2. Use your funds to buy an annuity.

If you choose to convert your RRSP into cash when you are 71, you will pay tax on it.

Questions about RRSPs

Your registered investment advisor can answer questions about your RRSP account, or you can visit the CRA website to find out more.

If you have any concerns about a person or company offering an investment opportunity, please contact BCSC Inquiries at 604-899-6854 or 1-800-373-6393 or through e-mail at [email protected] You can also file a complaint or submit a tip anonymously using BCSC’s online complaint form.

InvestRight.org is the British Columbia Securities Commission’s investor education website.

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