Question 1

Who can open an RRSP?

Accepted Answer

You are eligible to open an RRSP if you have contributing room.

For most Canadians, you can easily open an RRSP if you:
1. Are a Canadian resident
2. Have a Social Insurance Number (SIN)
3. Have contributing room
4. Have filed a tax return in Canada

Question 2

Which is better, RRSP vs TFSA?

Accepted Answer

Choosing between an RRSP or a TFSA depends on your financial goals and needs.

The major differences between RRSPs and TFSAs are based on the tax implications. RRSPs offer a tax deduction when you contribute, but you must pay tax when you withdraw the money. TFSAs, however, offer no tax deduction. But you also don’t need to pay tax on any withdrawals, including any growth.

In general, an RRSP may be better if you plan on withdrawing money when you’re in a lower tax bracket (like in retirement). A TFSA may be better for short-term goals, like buying a car or paying for a vacation.

Keep in mind, you don’t have to choose between an RRSP and a TFSA. You can have both.

Question 3

What’s the difference between RRSP vs RSP?

Accepted Answer

There is no difference between RSPs (Retirement Savings Plans) and RRSPs (Registered Retirement Savings Plans). Both terms refer to the same retirement savings plan.

RSP however, can also refer to a Registered Savings Plan. This is a general term that refers to all registered savings plans including Registered Disability Savings Plan (RDSP), Registered Education Savings Plan (RESP), and the RRSP.

Question 4

What can you do with an RRSP when you retire?

Accepted Answer

When you retire, you can use funds from your RRSP for any purpose, including:

1. General living expenses,
2. Paying medical or health-related costs (e.g. prescription drugs, health insurance, etc.),
3. Travel and vacation, and
4. Any hobbies you may take up.

Question 5

What’s the best investment for an RRSP?

Accepted Answer

It depends on your financial goals and needs. You can own a variety of investments within an RRSP like segregated funds, mutual funds, GICs, stocks, bonds and more.

Question 6

What happens to an RRSP when you die?

Accepted Answer

It depends on the situation. In many cases, an RRSP can roll over to the surviving spouse or common-law partner on a tax-deferred basis. Your spouse won't have to pay tax until they withdraw funds (and then only on what they withdraw during the year). Your spouse doesn’t require additional RRSP contribution room when the rollover happens. Otherwise, subject to a few exceptions, the value of your RRSP is included as income in your final tax return, regardless of who receives the funds (e.g. your adult children, a charity, etc.). This applies to most provinces, but special rules apply if you’re a Quebec resident.

Question 7

Can you have a successor holder for an RRSP like a TFSA?

Accepted Answer

No, you can name only beneficiaries to your RRSP. This applies to most provinces.

However, in Québec, you can only name a beneficiary to a RRSP for insurance contracts like insurance GICs and segregated funds. Québec doesn’t allow beneficiary designations on mutual funds, stocks, bonds and trust GIC held in an RRSP.

Question 8

Can you transfer your RRSP to a spouse or child tax-free during your lifetime?

Accepted Answer

No. During your lifetime you can’t transfer your RRSP tax-free to someone else. You can withdraw money from your RRSP and give it to your spouse, common-law partner or adult child. You’ll have to pay tax on that withdrawal.

Question 9

Can you leave your RRSP to your child?

Accepted Answer

Yes. You can leave your RRSP funds to your adult children at your death by naming them as the beneficiary of your RRSP³. The value of your RRSP will be included as taxable income in your final tax return. Your estate undefined
will have to pay the tax, even though your children will get the money. That’s why it’s important for your estate representative to ensure that they have enough money on hand to pay the tax. If the estate lacks the funds, the government can pursue the RRSP beneficiary for the deficiency. What’s more, in some cases, you may be able to do a tax-free rollover of your RRSP to a child or grandchild who’s financially dependent and has a disability. Speak to a tax and legal advisor to better plan for your unique situation.

Question 10

Do beneficiaries pay tax on RRSP money they receive at your death?

Accepted Answer

It depends on who you’ve named as your beneficiary:

1. If the RRSP money is rolled over to your spouse or common law partner, they won’t pay tax until they take money from the RRSP.
2. If the RRSP money goes to your adult children or anyone else, they won’t pay tax on the money they receive from your RRSP. But the entire value of your RRSP will be included as taxable income in your final tax return.

In rare cases, a child beneficiary may be able to transfer the RRSP money they receive to:

1. A term certain to age 18 annuity (financially dependent child under the age of minority),
2. Their own RRSP (adult or minor financially dependent child because of a disability), or
3. A lifetime benefit trust.

Question 11

Do RRSPs bypass probate?

Accepted Answer

If you’ve named a beneficiary for your RRSP, it’s not subject to probate undefined. However, if you don’t name a beneficiary, your RRSPs may be subject to probate. Please note that probate tax varies across provinces and territories. Probate applies to most provinces and territories, except Quebec.

Registered Retirement Savings Plan (RRSP)

Tax-Free Savings Account (TFSA)

Registered education savings plan (RESP)

Registered Retirement Income Fund(RRIF)

First Home Savings Account(FHSA)

What is an RRSP?

How does an RRSP work?

Helpful RRSP numbers to know

$30,780

$35,000

$10,000

71

RRSP contributions and withdrawals

RRSP contributions

RRSP withdrawals and taxes

Other types of RRSPs

Home Buyers’ Plan (HBP)

Lifelong Learning Plan (LLP)

Spousal RRSPs

Group RRSPs

Benefits of an RRSP

RRSP FAQs