3.2 Individual Registered & Non-Registered Plans: RRSP, RRIF, TFSA, RDSP, RESP
Key Takeaways
The 2026 RRSP dollar limit is $33,810; room is 18% of the prior year's earned income up to that limit, less any pension adjustment, plus unused room.
A spousal RRSP lets the contributor take the deduction while the annuitant spouse owns the plan; withdrawals within the year of a contribution or the next two calendar years are taxed to the contributor.
An RRSP must be converted to a RRIF, a registered annuity or cash by the end of the year the annuitant turns 71; RRIF minimums are 1/(90 − age) before 71 and 5.28% at 71.
The TFSA limit is $7,000 for 2026 (cumulative $109,000 for someone 18 and resident since 2009); withdrawals are tax-free, are re-added to room the next January and do not affect OAS or GIS.
RESPs earn the Canada Education Savings Grant (20% on the first $2,500 a year, $7,200 lifetime) and RDSPs earn disability grants and bonds; both have $200,000 (RDSP) or $50,000 (RESP) lifetime contribution limits.
Individual Registered and Non-Registered Plans
Most clients already have registered savings. Knowing the rules lets you assess whether the existing plans fit the client, and segregated funds and annuities can be held inside RRSPs, RRIFs, TFSAs and (with some insurers) other registered plans.
1. Registered Retirement Savings Plan (RRSP)
- Contribution room: 18% of the previous year's earned income, up to the annual dollar limit ($33,810 for 2026), minus any pension adjustment from a workplace plan, plus unused room carried forward. The CRA Notice of Assessment shows the limit.
- Deadline: contributions in the year or within 60 days after year-end can be deducted for that year.
- Tax: contributions are deductible; growth is tax-deferred; withdrawals are fully taxable.
- Withholding on withdrawals: 10% on amounts up to $5,000, 20% from $5,000 to $15,000, and 30% over $15,000 (5%, 10% and 15% federally in Quebec, plus Quebec tax). The final tax depends on the client's bracket.
- Over-contributions: more than $2,000 above the limit is taxed at 1% a month.
- Maturity: by December 31 of the year the annuitant turns 71, the RRSP must be transferred to a RRIF, used to buy a registered annuity (life, or term-certain to age 90), or withdrawn as cash (fully taxable).
- Home Buyers' Plan (HBP): up to $60,000 can be withdrawn tax-free to buy or build a qualifying first home, repaid over 15 years. Repayments normally start in the second year after the withdrawal; for first withdrawals made from 2022 through 2025, the enacted temporary rule starts them in the fifth year. The federal government's proposed extension for first withdrawals made from 2026 through 2028 is not treated here as current law unless enacted.
- Lifelong Learning Plan (LLP): up to $10,000 a year and $20,000 in total for full-time education, repaid over 10 years.
Spousal RRSP
The higher-income spouse contributes to an RRSP owned by the lower-income spouse (the annuitant) and claims the deduction, using the contributor's own room. Withdrawals are taxed to the annuitant spouse, except that amounts withdrawn in the year of a contribution or the two following calendar years are attributed back to the contributor (the three-year attribution rule). The goal is income splitting: two moderate retirement incomes are taxed less than one large one. Pension income splitting at 65 has reduced, but not eliminated, the advantage: spousal RRSPs still help with withdrawals before 65 and with RRSP (not RRIF) withdrawals.
2. Registered Retirement Income Fund (RRIF)
A RRIF keeps savings tax-deferred while paying income. Each year from the year after it is opened, the owner must withdraw at least a minimum percentage of the January 1 value:
| Age at the start of the year | Minimum withdrawal |
|---|---|
| Under 71 | 1 ÷ (90 − age), e.g. 4.00% at 65 |
| 71 | 5.28% |
| 72 | 5.40% |
| 75 | 5.82% |
| 80 | 6.82% |
| 85 | 8.51% |
| 95 or older | 20.00% |
The owner may elect to use a younger spouse's age to lower the minimum. The minimum is not subject to withholding tax; amounts above it are. From age 65, RRIF payments qualify for the pension income credit and pension income splitting. A spouse can be named successor annuitant to keep the RRIF going tax-deferred on death.
Example: Ana is 72 on January 1 and her RRIF is worth $300,000. Her minimum for the year is $300,000 × 5.40% = $16,200.
3. Tax-Free Savings Account (TFSA)
- Open to residents aged 18 or older with a SIN.
- Annual limit: $7,000 for 2026. Someone who has been 18 and resident since 2009 has cumulative room of $109,000 in 2026 if they never contributed.
- Contributions are not deductible; growth and withdrawals are tax-free.
- Withdrawals are added back to the contribution room on January 1 of the next year.
- TFSA income and withdrawals do not count as income for OAS, GIS or other income-tested benefits.
- A spouse can be named successor holder, so the TFSA continues tax-free.
4. First Home Savings Account (FHSA)
For first-time home buyers: $8,000 of deductible contributions a year to a lifetime $40,000, with tax-free withdrawals for a qualifying home purchase. It is newer than the curriculum but often appears in a client's existing coverage.
5. Registered Disability Savings Plan (RDSP)
For a person eligible for the disability tax credit. Lifetime contributions are limited to $200,000. The government adds the Canada Disability Savings Grant (up to $3,500 a year and $70,000 lifetime, matched to contributions) and, for lower-income families, the Canada Disability Savings Bond (up to $1,000 a year and $20,000 lifetime, no contribution needed). Grants and bonds received in the 10 years before a withdrawal may have to be repaid. RDSPs are protected in bankruptcy under BIA s. 67(1)(b.3).
6. Registered Education Savings Plan (RESP)
Saves for a child's post-secondary education. Lifetime contributions per beneficiary are limited to $50,000. The Canada Education Savings Grant (CESG) adds 20% of the first $2,500 contributed each year ($500), up to $7,200 per child; low-income families may also receive the Canada Learning Bond. Contributions come back tax-free; growth and grants are paid to the student as taxable educational assistance payments, usually at a low tax rate.
7. Non-Registered Savings, Life Insurance and Annuities
Outside registered plans, a client may hold bank savings, GICs, investment accounts, life insurance policies with cash values, and annuities. These are funded with after-tax money and their income is taxed each year (interest annually; capital gains when realized or, for segregated funds, when allocated). The agent needs the adjusted cost base (ACB) of any non-registered asset to know the tax cost of selling it to buy a new product.
8. Quick Comparison
| Plan | Contribution deductible? | Growth | Withdrawals | Can hold segregated funds? |
|---|---|---|---|---|
| RRSP / spousal RRSP | Yes | Tax-deferred | Taxable, with withholding | Yes |
| RRIF | (Transfer in) | Tax-deferred | Taxable; minimum each year | Yes |
| TFSA | No | Tax-free | Tax-free; room restored next year | Yes |
| RDSP / RESP | No | Tax-deferred | Growth and government money taxed to the beneficiary | Depends on the issuer |
| Non-registered | No | Taxed yearly | ACB returned tax-free; gains taxable | Yes |
Karim makes a $12,000 lump-sum withdrawal from his RRSP segregated fund contract. He lives in Manitoba. How much tax must the insurer withhold?
$1,200, the 10% rate for withdrawals up to $15,000
$2,400, the 20% rate for withdrawals over $5,000 up to $15,000
$3,600, the 30% rate that applies to every RRSP withdrawal
Nothing, because tax on RRSP withdrawals is only collected when the annual return is filed
In March 2026, Olivia contributes $8,000 to a spousal RRSP for her husband Ben. Ben withdraws $8,000 from that plan in October 2027. Who is taxed on the withdrawal?
Ben, because he is the annuitant and owner of the spousal RRSP
Nobody, because spousal RRSP withdrawals are tax-free to the couple
Ben and Olivia equally, under the pension income splitting rules
Olivia, because of the spousal RRSP attribution rule
Which statement about a TFSA held as a segregated fund contract is correct?
Withdrawals are taxable as income but do not affect the Guaranteed Income Supplement
Contributions are deductible, and withdrawals are added back to room immediately
Growth and withdrawals are tax-free; withdrawals restore room the next January 1
The 2026 TFSA dollar limit is $33,810, the same as the RRSP limit
Sections you finish are checked off in the contents.