FAQ – Savings and investment – RRSPs

RRSP allows you to put aside money tax-free to save for retirement, while also reducing your taxable income. You can use it, for example, to save for retirement, pay for your education or buy your first home.

TFSA allows you to put aside money tax-free to save up for anything you want. Renovate your home, start a business, or travel, the possibilities are endless!

Compare them to see the benefits of each product and find out which one’s right for you.

Check out the 9 most common myths about RRSPs and TFSAs.

There are two options available to open an RRSP:

Your decision will depend on factors such as your age, family situation, income and future plans.

A TFSA may be the best option if you're looking to save money but keep it accessible in case you need it. You can then transfer your savings to an RRSP to save on taxes.

Contact us to find the right savings strategy for you.

Yes, AccèsD makes it easy to contribute to your RRSP. Log in.

Yes. The year you turn 71 is the last year you can contribute to your RRSP. During the year, you will need to withdraw the funds from your RRSP, transfer them to a registered retirement income fund (RRIF) or use them to purchase an annuity.

Your deduction limit is displayed in the “RRSP deduction limit statement” section of the Notice of Assessment sent to you by the Canada Revenue Agency (CRA). If you can’t find your notice, contact a CRA tax office or visit the CRA’s My Account External link. Opens in a new window. portal.

No, because the most important part of compound interest is time.

Starting to invest when you’re young is definitely the way to go, even if you start small. Automatic transfers are a great way to get a head start.

Saving regularly in small amounts is easier on your budget. The great thing about automatic transfers is that you choose how much and how often you want to contribute, whatever works best for you. Your contributions are automatically deducted from your account and invested in your RRSP.

The sooner the better. You can start contributing to an RRSP the year you start earning contribution room (i.e., the year after you start earning an income). And after you turn 19, you get $2,000 of wiggle room for overcontributions. Time is money: the earlier you start contributing, the bigger your RRSP will be.

It all depends on your retirement plans. To maintain your lifestyle in retirement, the general rule of thumb is that you’ll need about 70% of the income you earn in the years leading up to your retirement. Most people become eligible for retirement income from CPP/QPP or a private pension plan around age 60, but it’s usually not enough. You’ll still need savings (ideally in an RRSP) to maintain your lifestyle.

The compounding effect on your interest means the more you save, the more you earn. Each dollar you’re able to contribute to your RRSP increases the capital on which the interest is calculated. So if you have extra money or if you’re in a better financial position, it’s a good idea to increase your RRSP contributions. Even putting an extra $5 a week into your RRSP will ultimately make a difference.

If you don’t have enough cash on hand to make an RRSP contribution, you might want to consider taking out a short-term loan. It’s one way to increase your RRSP contribution and get a tax break.

You can use those tax savings to pay down the loan, reducing your interest charges and the number of payments you’ll have to make.

If you don’t want to take out a loan, an easy way to fit savings into your budget is to set up automatic transfers. You can even do it yourself from AccèsD. Once your contributions are automatic, you won’t need to think about them!

Yes. If you earn BONUSDOLLARS® on your Desjardins credit card, you can use them to contribute to your RRSP.

Learn more about BONUSDOLLARS

The RRSP and the TFSA are complementary plans.

The RRSP is mainly used for retirement and the TFSA is ideal for different projects.

Your best choice will depend on your situation and needs.

Contact us to find the plan or combination that best suits your needs and savings goals.

For buying a home, consider an RRSP first because it allows you to participate in the Home Buyers' Plan (HBP).

Learn more about the Home Buyers’ Plan

You can use your TFSA to top up your down payment. Withdrawals are tax-free.

Anyone under age 71 who earns income and files a tax return in Canada can open an RRSP and make contributions.

There is a $2,000 grace amount for overcontributions, but the excess amount cannot be deducted from your taxable income. A penalty tax of 1% per month applies on contributions over the $2,000. The penalty is assessed monthly as long as the excess amount is still in your RRSP.

Yes, you can make withdrawals from your RRSP at any time. However, you will have to pay taxes on your withdrawals and you will lose contribution room. Withdrawals can reduce government benefits and credits that are based on income.

Yes, you can make early withdrawals to buy your first home or help you go back to school, and the amounts are not taxed so long as you repay them on time.

Speak with your advisor to find an effective strategy that meets your goals.

RRSP TFSA
Contributions are deductible from your taxable income Yes No
Withdrawals are taxed Yes No
Investment income becomes taxable when withdrawn Yes No
Taxation at death Yes
Unless your RRSP is transferred to your spouse or to a dependent child or grandchild.
No
After your death, your spouse can transfer the funds in your TFSA into their own. This will not affect their contribution room.

You can contribute to your spouse's RRSP and have the contribution deducted from your taxable income, even if you aren't the beneficiary.

You can't contribute to your spouse's TFSA. You can give your spouse money to contribute to their TFSA but this amount or any earned income from that amount will not be attributed back to you.

RRSP

RRSP withdrawals are taxable. They can reduce government benefits and credits that are based on income.

Funds withdrawn from your RRSP cannot be paid back, except under the Home Buyer's Plan (HBP) or Lifelong Learning Plan (LLP).

TFSA

TFSAs allow you to withdraw money when you want. Withdrawals are tax-free. They have no impact on government benefits and credits that are based on income.

Any money you withdraw will free up new contribution room the following year.

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