RRSP Basics: Questions Answered

Luisa Hough • January 31, 2017

Guest post by Randy Cass,

Welcome to RRSP season, otherwise known as the one time of year you’ll willingly read an article with RRSP in the title. It’s not a traditionally exciting topic, we get it, but it’s an important one. A little planning now will pay off big time later. We’re going to walk you through some of the most common questions we hear. Let’s get into it!

What’s so special about the RRSP?

A Registered Retirement Savings Plan is an account (think of it as a basket) that holds savings and investments. The magic of the RRSP is twofold: contributions are made with pre-tax income, meaning you’ll get a tax refund, and investments grow inside your RRSP basket tax free. That’s right, the tax man isn’t allowed to stick his hands in there. Compound interest  is left to do what it does best, grow your nest egg!

Just remember deferring tax doesn’t mean you’ll avoid paying it altogether. You’ll have to pay taxes when you withdraw money during retirement just as you would on any other income. The idea is you should be in a lower tax bracket when you retire and take out money, therefore you’ll pay less tax overall. Making sense so far?

What kinds of things can I put in there?

You can fill your RRSP basket with investments like stocks, bonds, GICs, mutual funds, ETFs, and money market funds. A common misconception is that a RRSP is an investment you purchase. It’s an account you open (think basket) and fill with investments you buy.

How much can I contribute this year?

You can contribute up to 18% of your income to a maximum of $25,370 for 2016. Your contribution room accumulates over time so if you haven’t maxed out your contributions in the past (many people haven’t!) you’ll have even more room available. Check the notice of assessment you received with last years tax return, or give CRA a call, to find out exactly how much contribution room you have. Your accountant will be able to tell you as well.

What’s this contribution deadline I’ve seen advertised?

The stretch between New Years and the contribution deadline has been dubbed “RRSP Season” which you’ve likely seen advertised at local banks. March 1st 2017 is the latest you can contribute to your RRSP and have the deduction count for the 2016 tax year.

This doesn’t mean any contributions made during January and February 2017 have to be claimed against the 2016 tax year. If you want to make a contribution now and save part or all of the deduction for 2017 (perhaps you’re expecting your income to be higher) you can do that.

How often can or should I contribute to my RRSP?

All this RRSP season hype might give you the impression you can only contribute once a year, but that’s not true! You can set up regular automatic contributions  (monthly, quarterly, etc) and avoid the RRSP season rush altogether.

An unexpected expense came up, can I withdraw money from my RRSP to cover it?

You can, but it might not be your best option. Depending on how much you withdraw you’ll be charged a 10-30% penalty  and you’ll have to pay income tax on that money. Keep in mind you won’t be able to re-contribute the amount you withdrew at a later date. That contribution room is lost.

Two ways you can withdraw money without penalty is under the Home Buyers Plan  and the Lifelong Learning Plan. The former is eligible to first time home buyers while the latter is available if you enrol in a qualified education program.

What happens to my RRSP when I retire?

Regardless of when you decide to retire, you’ll have to close your RRSP by December 31t in the year you turn 71. You can withdraw all your money (and be hit with a hefty tax bill), purchase an annuity, or transfer it into a Registered Retirement Income Fund (RRIF). You don’t have to convert your RRSP to a RIFF when you turn 65 or at the same time you retire. You can convert it at anytime before you turn 71.

What should I consider when opening or moving my RRSP?

You’ll need to look at the fees you’re paying —these include management expense ratios (MERs) for any mutual funds or ETFs, trading commissions, and annual administration fees. You want to keep these fees low so your money can grow as much as possible. If you’re working with a financial advisor check your statements to verify how much you’re paying. If you’re looking for lower fee investment options consider going the self directed  route or opening account with one of Canada’s digital wealth advisors.

We think Nest Wealth  is pretty awesome, but you know, we’re biased.

That’s it for now. You made it! You’re well on your way to mastering your RRSP and reaching those retirement goals. Knowledge is power, my friends.

 

This is a guest post from Randy Cass, CEO of Nest Wealth, a Canadian asset management company, it was originally published  on their website on January 19th, 2017.

Recent Posts

What Older Canadians Should Know About Mortgage Financing

By Luisa & Candice Mortgages • August 12, 2026
Retirement doesn’t always mean a mortgage-free life anymore. And that’s okay. Between higher home prices, rising living costs, and longer life expectancy, many Canadians are choosing to retire with a mortgage or refinance later in life to create more flexibility. The goal isn’t perfection. It’s having options that actually support the life you want to live. If you’re thinking about how a mortgage fits into your retirement years, you’re not alone—and you’re not out of options. Why work with an independent mortgage professional? Because retirement financing is not one-size-fits-all. Unlike a single bank, an independent mortgage professional can look across multiple lenders and solutions to find what truly fits your income, equity, and long-term plans—not just what one institution offers. Mortgage options available in retirement Traditional Mortgage Solutions Many retirees still qualify for standard mortgages. Pension income, investment income, and other retirement sources can often be used to support an application. If you have good equity and solid credit, this is often the lowest-cost option. Reverse Mortgages For homeowners 55+, a reverse mortgage can unlock tax-free equity from your home with no monthly payments required. There’s no income verification or medical questions, making it a helpful option for those who want to improve cash flow while staying in their home. Home Equity Line of Credit (HELOC) A HELOC allows you to access your home equity as needed and only pay interest on what you use. Many retirees appreciate the flexibility and like consolidating income and expenses in one place. Private Financing Sometimes life throws a curveball. If timing, income, or credit create challenges, private financing can act as a short-term bridge. It’s not usually the first choice, but it can provide solutions when traditional lenders can’t. If you’re approaching retirement—or already there—and wondering how your mortgage fits into the picture, let’s talk. A clear plan can make retirement feel a lot more secure and a lot less stressful.

Going Through a Divorce? Don’t Let Your Credit Take the Hit

By Luisa & Candice Mortgages • August 5, 2026
Going Through a Divorce? Don’t Let Your Credit Take the Hit Divorce is stressful enough without adding financial fallout to the mix. Between lawyers, paperwork, and emotional strain, it’s easy to overlook how a separation can impact your credit. But your financial future depends on protecting it now—because long after the dust settles, a damaged credit score can linger. Here are a few smart steps to help keep your credit strong and your finances steady as you move forward. 1. Take Control of Joint Debts When it comes to joint debt, both parties are equally responsible—no matter what your divorce agreement says. If your ex misses a payment on an account with your name attached, your credit takes the hit too. Go through all joint credit cards, loans, and lines of credit. Wherever possible: Close joint accounts to stop future shared use. Transfer balances to the person responsible for repayment. Notify lenders in writing of any changes to account ownership. Once everything is updated, pull your credit report after three to six months to confirm all joint accounts have been closed and reporting correctly. Mistakes happen—stay proactive to prevent surprises later. 2. Open Your Own Bank Accounts Separation means financial independence, and that starts with your own banking. Open a new chequing account in your name only and redirect your pay deposits and bill payments there. At the same time, close any joint bank accounts and change passwords on existing online banking and credit profiles. Even in peaceful separations, shared access can cause confusion—or conflict. Protect yourself by ensuring your money and information are secure. 3. Start Building Credit in Your Name If most of your past credit was tied to your spouse’s name, now’s the time to establish your own. Apply for a small personal credit card or secured credit product . Use it sparingly and pay it off in full each month. This helps you build a solid individual credit history, setting the stage for future goals like buying a home, refinancing, or starting fresh financially. 4. Keep an Eye on Your Credit Monitor your credit report regularly for errors or unexpected changes. You can request free reports from both major credit bureaus in Canada— Equifax and TransUnion —once a year. Tracking your credit isn’t just about catching mistakes; it helps you see your progress as you rebuild your financial independence. Final Thoughts Divorce can be emotionally draining, but protecting your credit doesn’t have to be complicated. By taking a few careful steps now—closing joint accounts, building credit in your name, and monitoring your reports—you’ll safeguard your financial health and gain peace of mind as you start your next chapter. If you’d like personalized guidance on managing credit during or after a divorce, reach out anytime. I’d be happy to walk you through your options.

Employment and Mortgage Qualification: What Lenders Look For

By Luisa & Candice Mortgages • July 29, 2026
When you apply for a mortgage, your employment history and status carry a lot of weight. Even if you feel secure in your job, lenders need proof that your income is reliable and will continue. To them, your employment status is one of the strongest indicators of whether you can make your mortgage payments long term. Here’s how lenders typically view different employment situations: Permanent Employment This is the gold standard. Once you’ve passed any probationary period and hold permanent status, lenders see you as a lower risk. It shows that your employer is committed to you, and your income is steady. Probationary Periods If you’re still on probation—usually 3 to 6 months, though sometimes longer—lenders may hesitate. That’s because your employer can end your contract without cause during this period. Once probation is over, you’re considered more secure. That said, context matters. If you’ve worked with the same company for years as a contractor and just transitioned into full-time employment, lenders may accept a letter from your employer confirming that probation is waived. Documentation is key here. Parental Leave Being on or about to take parental leave doesn’t mean you can’t qualify for a mortgage. As long as you have a letter from your employer guaranteeing your position and return-to-work date, lenders can use your regular salary—not your leave income—when assessing your application. Term Contracts This is one of the trickiest categories. Even highly skilled professionals with strong incomes can face challenges here. A term contract has a start and end date, which makes lenders question the stability of your future income. To use term-contract income, lenders generally want to see at least two years of history, or proof that your contract has already been renewed. The more evidence you can show of consistent employment, the stronger your case will be. The Bottom Line If you’re planning to apply for a mortgage, it’s important to understand how your employment status could affect your approval. Whether you’re starting a new job, coming back from leave, or working under contract, lenders want documentation that proves your income is reliable. 📞 If you’ve recently changed jobs or are planning a career shift, let’s connect. I can help you prepare your file so you qualify with confidence and avoid surprises in the approval process.

Luisa & Candice Mortgages 

Contact Me Anytime!

The best way to get ahold of me is to submit through the contact form below. However feel free to give me a shout on the phone as well.

Contact Us