An RRSP is a type of personal retirement plan that enables users to deposit and invest up to $29,210 in 2022, or 18% of their annual income. Tax-deductible and tax-deferred contributions ensure that money grows tax-free before being taxed as income upon withdrawal in retirement.
A Group RRSP, which is an RRSP set up by an employer for its employees, is also available. Funding for the account is taken directly out of each paycheck, and a fund manager often invests the money.
This article will help you to get a basic understanding of an RRSP account. I also suggest you open a brokerage account where you can get free stocks, money or/and free trades by simply opening and funding your account with Wealthsimple, InteractiveBrokers, and Questrade.
Are you Eligible?
You can create an RRSP if you have an income, file a tax return with the Canadian Revenue Agency (CRA), and are under 71 years old. The contribution ceiling is determined by your tax return from the prior year, so if you recently immigrated to Canada, you might need to wait before making a contribution. This implies that you will not be allowed to make any contributions until you have declared your income to the CRA.
To be eligible for a Group RRSP, it would need to be offered through your company in addition to having already filed a tax return.
How to register
You can start contributing to an RRSP as soon as you have lived and worked in Canada long enough to be eligible to file a tax return. In order to start an RRSP directly through your company and set up automatic contributions from your paycheque, it is a good idea to first inquire as to whether your employer offers an RRSP option. Any large bank or financial organization where you bank allows you to open a personal RRSP.
My Recommendations
All the major banks in Canada offer RRSP accounts, but in my opinion, the fees are very high. Following are three of my favourite low-cost/free brokerages for opening an RRSP account, and you can get rewarded with cash, free stock or free trades by opening and funding your account using my referral links.
WEALTHSIMPLE
Wealthsimple might be a good recommendation if you are just starting out because it doesn’t have any commission fees. When you open a trading account, you can get rewarded with a free stock value between $5 and $4,500 using this link or entering my reference code: OFZZHW
INTERACTIVE BROKERS
InteractiveBrokers is the best low-fee brokerage account for anyone if you are trading a lot. In my opinion, it’s the best overall compared to Wealthsimple and Questrade. Open an account today using my link and start earning up to $1000 of IBKR Stock for free!
QUESTRADE
Questrade is another Canadian low-cost brokerage. If you’d like to sign up for Questrade, use my referral Qpass Key 426019605447668 to get a $50 bonus.
Check out www.canada.ca for the most up-to-date information, and if you want to learn more about RRSP, check out this article at canada.ca.