The federal government introduced RRSPs to supplement Canada Pension Plan payouts. RRSPs help Canadians ensure they have enough saved for a rewarding retirement.

The growth on investments inside a registered plan is tax-deferred, meaning you don’t immediately pay tax. Any interest, capital gains or dividends earned will compound tax-free. Money is only taxed – as income – when you remove it from the plan.

The best way to save for your retirement:

RRSPs are the single most significant financial opportunity available to Canadians today. Investors recognize them as the most efficient and prudent way to save for retirement. Unless you participate in an extremely generous plan, a corporate pension plan alone cannot meet your income needs throughout retirement.

Key benefits of an RRSP

• Investments compound tax-deferred as long as they remain in the plan
• Choose your holdings from a wide range of options
• Contributions are tax-deductible

• Contributions to your RRSP are usually due no later that the last day of February (or 60 days after year-end).
• You can contribute up to 18% of your earned income each year, minus pension adjustments from your company pension plan, up to the annual maximum:
  • 2008 - $20,000
  • 2009 - $21,000
  • 2010 - $22,000
  • 2011 - $22,450
• You can carry forward unused RRSP contribution room indefinitely.
• The penalty for over-contributions over $2,000 is 1% per month, starting at the end of the first month in which the limit has been exceeded.
• You can hold mutual funds, equities, bonds, cash and other investments in your RRSP.