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MCAN Wealth 1-year non-registered GIC
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Interest rate: 5.10%
Minimum amount: $1,000
Eligible for CDIC coverage: Yes
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What’s an RRSP?
An RRSP is a savings account registered with the Canadian government. It’s designed to help Canadians save for retirement. RRSP contributions are tax-deductible, meaning they can reduce your taxable income for that tax year, but the deductions can also be delayed and carried forward to deduct in a future year.
Any investment growth or income earned within an RRSP is exempt from annual tax. You must, however, pay tax at the time of withdrawal—ideally, when you’re in retirement or otherwise in a lower tax bracket than you are today.
These tax advantages make RRSPs a valuable tool for retirement saving. However, there are limits on how much you can contribute to your RRSP in any given year. Make sure you know your RRSP limit to avoid unnecessary tax penalties.
What’s my RRSP contribution limit?
While RRSP rules apply to every Canadian, each of us have our own RRSP contribution limit. There are three factors that determine your individual contribution limit:
The RRSP contribution limit set by the Canadian government. This limit changes annually. For 2024, the maximum any Canadian can contribute to their RRSP is $31,560 (up from $30,780 in 2023). Below, you will find the contribution limits for each of the past 10 years.
Your earned income reported during the previous tax year. Your individual contribution limit is 18% of your earned income from the previous tax year, or the annual maximum set by the government—whichever is less. This means that only individuals with an earned income of $175,333 or more in 2024 will earn the full $31,560 RRSP contribution room available this year. Earned income for RRSP purposes is most commonly the amount in box 14 of your T4 slips; earned income also includes self-employed net income, Canada Pension Plan (CPP)/Québec Pension Plan (QPP) disability payments and net rental income.
RRSP room may be reduced if you are a pension plan member. If you are a member of a defined contribution (DC) or defined benefit (DB) pension, you will have a “pension adjustment” on your T4 slip. This pension adjustment reduces your RRSP room for the following year. The reason for the adjustment is to even the playing field between pension plan members and those without pensions, so pension plan members don’t get more ability to save for retirement on a tax-deferred basis.
The amount of unused contribution room you can carry forward. Unused RRSP contribution room in one year can be carried forward to another year. Your total contribution room is therefore made up of your limit from the current year, plus any unused contribution room from previous years. Read more about the carry-forward rules for unused RRSP contributions.
RRSP contribution limits by year
Tax yearContribution limit2024$31,5602023$30,7802022$29,2102021$27,8302020$27,2302019$26,5002018$26,2302017$26,0102016$25,3702015$24,9302014$24,270
The RRSP deadline this year
The deadline for RRSP contributions for the 2023 tax year is Feb. 29, 2024. Contributions made in the first 60 days of the year can be applied to the previous taxation year.
Where can you find your RRSP contribution limit?
After the Canada Revenue Agency (CRA) processes your tax return, it sends a Notice of Assessment (NOA), which includes your next year’s contribution limit. This notice also shows your unused contribution room. You can also call your local Tax Information Phone Systems (TIPS) number, and be sure to have your SIN and previous tax return ready. Alternatively, you can register for My Account with CRA to view your RRSP limit, track your refund, make updates to your return and monitor payments.
What happens if you overcontribute to your RRSP?
If you overcontribute to your RRSP by more than $2,000, you will be subject to a penalty tax. Typically, the penalty is 1% per month on the excess contribution for as long as it remains in your account. You can stop the penalty from growing if you withdraw the excess amount. (Read more about what to do if you have overcontributed to your RRSP.)
What is the age limit to contribute?
You can open an RRSP at any age. You can then contribute to your RRSP until Dec. 31 of the year you turn 71. At that time, you must either cash out your RRSP, convert it to a registered retirement income fund (RRIF) or purchase an annuity.
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