RRSP Contribution Limit — 2024

A Registered Retirement Savings Plan (RRSP) is a great option for retirement savings in Canada. While there are guidelines to follow, like contribution limits, an RRSP offers significant tax advantages. You can enjoy both yearly tax benefits when you make contributions and save on taxes when you retire and begin withdrawing funds. 

There's a lot to consider with these accounts, from understanding the TFSA vs RRSP differences to knowing RRSP tax benefits. Let's take a closer look.

What is an RRSP?

An RRSP is a savings plan designed to assist Canadians in saving for retirement. It can also be used for education or your first home. However, it isn’t just about long-term savings. It might also be used to reduce your current taxes by deducting contributions from your taxable income. 

The funds you deposit in your account are tax-deductible. This feature allows you to lower your taxable income for the year. Another important thing to note is that your investment gains are calculated according to a tax-deferred principle. That means the money you earn from your RRSP won’t be taxed while it grows within the plan. You’ll pay taxes when you withdraw your funds later, but most likely when you’re in a lower tax bracket in retirement.

What’s My RRSP Contribution Limit?

Your annual contribution limit, also known as the RRSP deduction limit, is the maximum amount of funds you’re allowed to deposit into your account within a year. Your annual RRSP contribution room equals 18% of your previous year’s reported income. 

Note that the 2024 RRSP contribution limit is $31,560. The Canada Revenue Agency adjusts the annual deduction limit regularly to reflect inflation and ensure it remains aligned with economic conditions. 

You can have several RRSP accounts. For example, you can have an individual account, plus you can contribute to a Spousal account that is registered in your spouse’s name. You may also belong to a Group RRSP or a Registered Pension Plan through your workplace. Please note that your contribution room may be reduced by any pension adjustment (PA) reported on your T4 slip.  

There are a few more things to keep in mind when estimating your RRSP deduction limit. Any unused contribution room carries forward and is added to your lifetime contribution amount. If you don’t have the funds available to save up for retirement now, you can always leverage that unused contribution room later on.

When calculating your individual contribution limit, you’ll need to know the exact volume of your previous contributions and the limits for each year. 

RRSP Contribution Limits by Year 

RRSP contribution limits aren’t stable. They tend to change annually to account for larger-scale economic trends. Generally, the deduction limits increase each year. You should know of such changes to calculate your lifetime RRSP contribution room accurately.

The following table represents the changes in the Canadian RRSP deduction limit from 2014 to 2025. 

What Are the Benefits of an RRSP?

The  biggest RRSP perk for Canadians are the tax benefits:

• Contributions are tax-deductible. When you make a contribution, you can deduct the amount from your total taxable income, which should lower the amount of tax you pay that year. It's a big advantage compared to saving in a regular account or making standard investments.

• Investment income grows on a tax-deferred basis. Money and investments in your RRSP remain tax-free until you withdraw them. This allows your investment to grow without being taxed each year.

• Retirement vs. employed tax rates can work in your favor. Because you’ll typically find yourself in a lower tax bracket in retirement, when you withdraw your funds later in life, you’ll pay less taxes. 

Accessibility is another advantage of RRSPs. If you’re 71 or younger and pay income tax, you qualify to set up an account. You can open an individual or spousal RRSP, depending on your financial goals. What’s more, RRSPs have rather limited eligibility restrictions. Just about anyone in the workforce can start saving for their retirement.

You can borrow from your RRSP for a first home or education. These withdrawals are generally not taxed. That makes your retirement savings even more flexible.

2024 RRSP Contribution Limit 

How do you find your limit for RRSP contributions? The Canada Revenue Agency (CRA) maintains a table that lists contribution limits for different retirement plans.

For 2024, the RRSP contribution limit is $31,560. In 2025, the maximum figure will jump to $32,490. However, there’s also an individual RRSP deduction limit based on a percentage of your income.

The CRA notes the contribution limit for RRSPs is either the fixed limit or 18% of your income in the prior year — whichever figure is lower. However, you can and should include any unused contribution room from the end of the previous year.

Contributions made beyond your limit could result in penalties, potentially weakening or even eliminating the tax benefits of your account. That’s why it’s critical to understand and stick with your personal contribution limit.

Wondering how to calculate your contribution limit exactly? The CRA offers detailed steps to help you figure it out. Start the process with the CRA's guidance on RRSP limits.

Where Can You Find Your RRSP Contribution Limit?

After the Canada Revenue Agency (CRA) analyzes your previous year’s tax returns, it sends a Notice of Assessment (NOA) with next year’s personal deduction limit. NOA also includes your unused contribution room, making it easier to see your allowed contributions. 

Alternatively, you can find your RRSP deduction limit by calling the Tax Information Phone Service (TIPS) number. In this case, ensure you have your Social Insurance Number and previous tax return documents on hand. 

Another way to always stay updated on your RRSP deduction limit is by registering an account with CRA. You’ll then be able to access your contribution details and monitor your funds. 

What If You Go Over the RRSP Contribution Limit?

In most cases, you’ll be charged a 1%-penalty on the beyond-the-limit contribution for every month it remains in the account. 

Please note that you can stop this penalty by withdrawing the excess amount from your account or completing a Schedule 7. To withdraw your excess funds without upfront withholding tax, you should complete form T3012A. A Schedule 7 will designate the specific contribution amount you seek to move forward to the next tax year. 

Setting Up Your RRSP with Innovation

If you need help making informed decisions about your retirement, please reach out. Let’s work together to help you retire sooner!