TL;DR:
RRSP contributions reduce taxable income, unused room carries forward, withdrawals are taxable, and over‑contributions can trigger penalties—always confirm your room with CRA.

1. Contribution room is based on income

Your room is typically 18% of last year’s earned income, up to the annual maximum. Unused room carries forward.

2. RRSPs reduce your taxable income

Contributions can lower your income tax for the year you claim them. You can contribute now and claim the deduction later.

3. Employer pensions reduce your room

If you have a workplace pension, your RRSP room is reduced by a pension adjustment on your Notice of Assessment.

4. Withdrawals are taxable

RRSP withdrawals count as taxable income. This matters in retirement and for large withdrawals today.

5. Over‑contributions are penalized

There’s a small buffer, but excess contributions can be penalized at 1% per month until corrected.

6. RRSPs have special withdrawal programs

Programs like the Home Buyers’ Plan (HBP) or Lifelong Learning Plan (LLP) allow withdrawals under specific conditions — but they must be repaid.

7. Unused room carries forward

If you don’t contribute this year, your room rolls forward to the next year.

Common mistakes to avoid

• Ignoring pension adjustments
• Contributing without checking room
• Withdrawing without planning for tax
• Missing repayment rules for HBP/LLP

Your next step

Check your official RRSP room in CRA My Account, decide your contribution target, and track it monthly.

Final note: This is education and planning — not financial advice. Always confirm your official RRSP contribution room in CRA My Account.