Wealthsimple RRSP

The RRSP is Canada's classic retirement vehicle. Its superpower is the upfront tax deduction: every dollar you contribute reduces your taxable income for the year, which can mean a real refund at tax time.

How an RRSP works

• Contributions are tax-deductible, they lower your taxable income for the year, often generating a refund.
• Growth is tax-deferred, interest, dividends, and capital gains compound without any yearly tax inside the account.
• Withdrawals are taxed, money comes out as taxable income, ideally in retirement when your marginal rate is lower.

Because of the deduction, RRSPs are especially powerful for people in higher tax brackets. The strategy is simple: if you expect to earn less in retirement than you do today, you shift income from a high-tax year (now) to a low-tax year (later), and pocket the difference. The investments grow untaxed the entire time in between.

The tax deduction, with a real example

The headline benefit is the upfront refund. Suppose you earn $90,000 and contribute $10,000 to your RRSP. At a combined marginal tax rate of roughly 35%, that contribution reduces your tax bill by about $3,500, money the CRA effectively returns to you. A savvy move is to reinvest that refund (into your TFSA or back into your RRSP) so the benefit compounds rather than being spent.

The higher your income, the bigger the deduction is worth. Someone in a 50% bracket saves $5,000 in tax on the same $10,000 contribution.

You don't even have to claim the deduction in the year you contribute, you can carry it forward to a future, higher-income year to maximize the benefit.

Contribution limits & the deadline

Your annual RRSP room is 18% of your previous year's earned income, up to a yearly maximum, plus any unused room carried forward from past years:

If you have a workplace pension, your pension adjustment reduces your RRSP room. The single source of truth for your personal limit is your latest CRA Notice of Assessment or CRA My Account.

The RRSP contribution deadline for the prior tax year falls in the first 60 days of the new year (usually early March), which is why late winter is peak "RRSP season."

Home Buyers' Plan & Lifelong Learning Plan

You can borrow from your own RRSP tax-free under two government programs, as long as you repay on schedule:

• Home Buyers' Plan (HBP), withdraw up to $60,000 toward a first home, repaid over 15 years.
• Lifelong Learning Plan (LLP), withdraw funds for full-time education or training, repaid over 10 years.

If your main goal is a first home, compare the FHSA first, it's often the better starting point, and you can combine an FHSA with the HBP on the same purchase for a much larger tax-advantaged down payment.

Withdrawals, RRIFs & age 71

Outside the HBP and LLP, any RRSP withdrawal is fully taxable and is subject to immediate withholding tax (10–30% depending on the amount). You also permanently lose that contribution room. By the end of the year you turn 71, you must convert your RRSP into a RRIF (or annuity) and begin taking minimum annual withdrawals. For most people, the RRSP is best treated as a long-term, leave-it-alone retirement account.

Spousal RRSPs

Wealthsimple also offers the spousal RRSP, a powerful income-splitting tool for couples with unequal incomes. The higher-earning spouse contributes and claims the tax deduction, but the account is owned by the lower-earning spouse, who eventually withdraws the money at their lower marginal rate in retirement. The result is a smaller combined tax bill for the household over time.

• Who deducts, the contributing spouse claims the deduction, against their own RRSP room.
• Who owns it, the other spouse owns the account and controls the investments.
• Why it helps, it evens out two retirement incomes so neither is pushed into a higher bracket.

Watch the attribution rule: if the owner withdraws contributions within three calendar years of a deposit, that amount is taxed back to the contributing spouse. A spousal RRSP is best treated as a long-term plan. It's most useful when one partner expects a noticeably larger retirement income than the other.

How to open a Wealthsimple RRSP

1. Open wealthsimple.com/invite/_Y024Q to attach referral code _Y024Q.
2. Create your account and verify your identity with photo ID and your SIN.
3. Choose RRSP as your account type, then pick managed or self-directed.
4. Deposit at least $100 from an external bank within 30 days.
5. Your $25 bonus arrives in your Cash account within 24 hours of the deposit settling.

Does the $25 bonus use RRSP room?

No. Wealthsimple pays the referral bonus into your Cash account, so it never touches your RRSP deduction limit, your full contribution room stays intact. The same applies to your TFSA and FHSA room. You also get $0-commission self-directed investing or a hands-off managed portfolio, no account minimum, and the same award-winning app.

RRSP or TFSA first?

If you're in a higher tax bracket and want a deduction now, the RRSP often wins. If you want maximum flexibility and tax-free withdrawals, start with a TFSA. A common approach for middle incomes is to favour the TFSA, then add the RRSP as income rises. Plenty of Canadians contribute to both, and both qualify for the referral bonus.

Wealthsimple RRSP questions

Common questions about the Wealthsimple RRSP, contribution limits, and the $25 bonus.