How to Contribute to an RRSP: Limits, Deadlines, and Penalties

To contribute to an RRSP, open a Registered Retirement Savings Plan at a Canadian financial institution and deposit money up to your personal deduction limit, which is 18% of your previous year’s earned income to an annual maximum set by the Canada Revenue Agency. For the 2025 tax year that cap is $32,490, and for 2026 it rises to $33,810.¹ Contributions made by March 2, 2026 can be applied to the 2025 tax year.² Every dollar you put in reduces your taxable income for the year you claim the deduction, and investments inside the account grow tax-free until withdrawal.

Who Can Contribute

Three conditions have to be met. You must be a Canadian tax resident, you need earned income reported on a Canadian tax return, and you must not have passed December 31 of the year you turn 71.² That last date is the final day you can contribute to your own RRSP.

Earned income is what builds your room. It includes employment wages, self-employment income, net rental income, and certain other categories such as alimony received.³ Investment income, whether interest, dividends, or capital gains, does not count. Neither does pension income. Retirees with large investment portfolios are often surprised that none of that generates new RRSP room.

If you have left Canada but still have deduction room from prior Canadian-source income, you may still be able to contribute. Your room reflects income reported on Canadian returns from 1990 onward.⁴

How Much Room You Have

Your deduction limit for any year is the lesser of 18% of the previous year’s earned income or that year’s dollar cap.¹ If you belong to an employer pension plan, a pension adjustment reduces the room available to you. The adjustment reflects the value of pension benefits you earned during the year and is subtracted from the next year’s limit automatically based on information your employer reports.⁵

Room you don’t use carries forward indefinitely. Someone who earned income for a decade without contributing may have a very large accumulated limit. Check your exact figure before making a large deposit. The fastest way is CRA My Account online, or the RRSP Deduction Limit Statement on your most recent Notice of Assessment.⁶ Confirm the number if your income or pension situation changed during the year.

Opening an Account and Moving Money In

You set up an RRSP through a bank, credit union, trust company, or insurance company.⁷ You will need your Social Insurance Number and valid government-issued identification. Most institutions also ask for employment details and proof of income.

Once the account is open, there are three common ways to fund it:

Electronic transfer through your banking portal, directly into the RRSP account. This is the most common method and usually processes within one business day.
Bill payment, by adding your brokerage or RRSP provider as a payee and sending money the same way you would pay a utility.
Payroll deduction, where your employer redirects part of your gross pay into your RRSP. Because the contribution comes out before you receive the money, your employer can reduce the income tax withheld from each paycheque, giving you the tax benefit up front rather than at filing time.⁸

After each contribution your financial institution issues an official receipt. You need it to claim the deduction on your tax return at line 20800.⁹ Contributions made in the first 60 days of the calendar year come with a separate receipt for that window so you can choose which tax year to apply them to.

Contribution Deadlines

You can contribute at any point during the calendar year, and you get an extra window on top: contributions made in the first 60 days of the following year can also be applied to the previous tax year. The deadline for the 2025 tax year is March 2, 2026.² That date can shift slightly from year to year depending on how weekends fall, so verify it with the CRA each January.¹⁰

The 60-day overlap matters because by late February you know your full income for the previous year and can size your contribution to the deduction you want. Many people make their annual contribution during this window for that reason. Make sure the deposit clears before the deadline, not just that you initiated the transfer.

Spousal Contributions

You can also open a spousal RRSP. You make the contribution and claim the deduction, but the account belongs to your spouse or common-law partner. The receipt lists you as the contributor and your partner as the annuitant.¹ This is a useful income-splitting strategy when one partner earns significantly more than the other.

There is a catch. If your spouse withdraws from a spousal RRSP in the calendar year you contributed or in either of the two preceding years, the withdrawal is taxed in your hands, not theirs.¹¹ The three-year attribution rule exists to prevent short-term income shifting, and it should shape when you contribute if withdrawals are on the horizon.

Overcontribution Penalties

The CRA gives you a $2,000 lifetime buffer above your deduction limit. If your total unused contributions exceed the limit by $2,000 or less, there is no penalty. Go a dollar beyond that buffer and you owe a tax of 1% per month on the excess for every month it remains in the account.¹²

That 1% monthly penalty adds up fast. A $10,000 overcontribution beyond the buffer costs $100 every month until you fix it. You can avoid the tax by withdrawing the excess before the end of the month in which it was contributed. If the penalty does apply, you report it by filing a T1-OVP return and paying the tax within 90 days after the end of the year the overcontribution occurred.¹²

The buffer applies only to contributors aged 18 and older. Treat it as a safety margin for rounding errors, not a strategic pocket of extra room: you cannot deduct the amount, and any growth on it stays locked inside the plan.

When Contributions to Your Own RRSP Have to Stop

By December 31 of the year you turn 71, your RRSP must be closed, usually by transferring it to a Registered Retirement Income Fund or using it to buy an annuity.² You cannot contribute to your own plan after that date. You can, however, still contribute to a spousal RRSP using your remaining deduction room, as long as your spouse is under 71.

1
Canada Revenue Agency (CRA). RRSPs and Other Registered Plans for Retirement
2
Canada Revenue Agency (CRA). Important Dates for RRSPs, HBP, LLP, FHSAs and More
3
Canada Revenue Agency. Definitions for RRSPs
4
Canada.ca. T4058: Non-Residents and Income Tax
5
Canada Revenue Agency. Line 20600 – Pension Adjustment
6
Canada Revenue Agency. Where Can You Find Your RRSP Deduction Limit
7
Canada Revenue Agency (CRA). Setting Up an RRSP
8
Canada.ca. Calculate Payroll Deductions and Contributions
9
Canada Revenue Agency (CRA). Line 20800 – RRSP Deduction
10
Canada Revenue Agency (CRA). Contribution Year
11
Canada.ca. Withdrawing from Spousal or Common-Law Partner RRSPs
12
Canada.ca. Excess Contributions