C'est quoi un régime enregistré d'épargne-retraite (REER)?

RRSPs have been around since 1957 and were introduced by the federal government. Their aim was to help Canadians save for retirement by providing them with a tax-deferred savings plan.

Opening an RRSP is super easy. The only conditions for eligibility are that you’re under 71 years of age, a Canadian resident (for tax purposes), and that you file income taxes in Canada. You can even sign up if you’re a minor (and good for you for getting such a jump start on your retirement!). You’ll just need written consent from a parent or guardian.

That depends on how much you contribute and what tax bracket you’re a part of. If you contribute the maximum — or even more, in the case of those who have contribution space carried forward from prior years — you could avoid paying tax on a substantial portion of your income.

The value of your RRSP depends on how much you’ve contributed each year, what assets your RRSP is invested in, and how many years you’ve had the account for. The other big factor? Market performance. We talk more about passive investment expectations here.

When you retire, your RRSP turns into a Registered Retirement Income Fund (RRIF) that you can withdraw money from. (Those withdrawals will be taxed as income.) If you shuffle your mortal coil before retiring, however, your RRSP is usually rolled over to a beneficiary on a tax-deferred basis. The beneficiary would be designated by you, but if no beneficiary has been named then the proceeds for your RRSP are considered part of your estate and will be distributed accordingly.

An RRSP can’t be transferred while the account holder is still alive, but you can open a joint RRSP with a spouse.

Contributing to an RRSP usually doesn’t affect Old Age Security (OAS). The exception is when you withdraw enough from your RRSP to reach a certain net taxable income during retirement. At that point, your OAS will be subject to a recovery tax, also known as the “clawback.”

If your employer offers a group RRSP, the manager is provided for you. Otherwise, many financial institutions (including this one) offer RRSP accounts. We’re biased, but we think you’ll like what we offer — especially if you like low fees and a really user-friendly experience.