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A Registered Retirement Savings Plan (RRSP) is an account available to Canadian taxpayers who are 18 years of age or older, in which they can deposit pre-tax income, which isn’t taxed until the money is withdrawn. The money in this account can be invested freely, but there is an annual contribution limit.
The RRSP annual contribution limits are based on several factors. Account-holders can contribute 18% of their previous year’s earned income, up to a maximum limit. In 2019, the maximum contribution limit is $26,500. Previous annual contribution limits are as follows:
Contributions that are deductible in the current year must be put into the RRSP no later than 60 days after the end of the taxation year. For more information on RRSP contributions, see CRA Guide T4040.
Withdrawing the entire sum of money in a single year is not recommended, as this often puts the account holder in a higher income bracket for that year. Individuals who have RRSP deduction room available after age 71 will be able to contribute to a spousal RRSP until the end of the year in which their spouse or common-law partner turns 71.
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