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Registered Retirement Savings Plan (RRSP)

As a Canadian, you have the opportunity to save for your retirement in a tax deferred plan called a Registered Retirement Savings Plan (RRSP) which is registered with the Canadian government. You can find your maximum contribution limit in your annual Notice of Assessment sent by the CRA after your tax return is processed.

You pay no income tax on the money that you earn in your RRSP until you withdraw it. At that time, the amount you withdraw is considered income and taxed according to your income bracket.

Money that you withdraw before retirement is subject to a withholding tax that varies by the withdrawal amount. This means that your financial institution will hold back the tax on the amount you withdraw and pay it to the government directly. Note, there are a couple of instances where early withdrawal is permitted without penalty including the Home Buyers’ Plan and Lifelong Learning Plan.

If you withdraw: Withholding tax rate (except Québec)
Up to $5,000 10%
Between $5,000 and $15,000 20%
More than $15,000 30%

For more information, please check with Canada Revenue Agency (CRA) at cra-arc.gc.ca.

Many Canadians do not have employer-sponsored pension plans and will need to rely on their own savings to fund part or all of their retirement needs.

To help your savings grow faster, the Canada Revenue Agency defers tax on the money you make inside an RRSP until you reach the age of 71. This gives you tax-free growth on your RRSP funds along with any investment earnings as long as they remain in your RRSP account.

In addition to deferred taxes, you can deduct the amount that you contribute to an RRSP from your income on your tax return which could reduce the amount of tax you pay in the contribution year.

You can withdraw funds from your RRSP account if you are using the funds to buy your first home under the Home Buyers’ Plan (HBP) or to pay for education costs for you or your spouse under the Lifelong Learning Plan (LLP). The withdrawals are tax free as long as you pay the money back within specified time periods.

At age 71, it is mandatory that you begin to withdraw your savings as taxable income. At this time your RRSP will be converted to a Retirement Income Fund (RRIF). The annual income that you receive from a RRIF is typically less than the income you earned while working. That means your income tax bracket and the taxes you pay on the funds withdrawn from your RRSP tend to be lower than during your earning years.

For more information, please check with Canada Revenue Agency (CRA) at cra-arc.gc.ca.

Anyone with Canadian-earned income who is under the age of 71 and has filed a tax return can contribute to an RRSP. The Income Tax Act sets limits on how much you can contribute annually (based on your income) and over your lifetime. You can find your lifetime contribution limit on the Notice of Assessment that you receive from the Canada Revenue Agency (CRA) after filing your tax return each year.

To open a Zag RRSP, you must be a Canadian resident who is the age of majority in the province or territory you live in. Note that we do not offer products and services to residents of Québec at this time.

If you are turning 71 this year, you can continue making contributions to your RRSP until December 31st. After that, you will need to convert all of your RRSPs to a Retirement Income Fund (RRIF).

For more information, please check with Canada Revenue Agency (CRA) at cra-arc.gc.ca.

No. You have the right to withdraw money from your RRSP at any time but your contribution room will not be adjusted. You should also know that any withdrawals from your RRSP will be subject to an automatic withholding tax that varies by province and the money will be considered taxable income in the year in which you take it out. You will also forego the long-term growth potential of your investment in a tax-deferred plan.

The Canada Revenue Agency makes two exceptions when it comes to taxing the money that you withdraw from your RRSP. If you’re planning to buy your first home or enhance your skills through training or education, you may qualify for one of these options:

Home Buyers’ Plan (HBP)

If you are buying or building a qualifying first home, you can withdraw up to $25,000 from your RRSP with no tax at the time of withdrawal and the amount will not be added to your annual income for tax purposes. You will be required to pay the money back within 15 years of withdrawal to avoid any taxes or penalties.

Lifelong Learning Plan (LLP)

If you plan to enhance your income-earning potential or want to train for a new occupation, you can withdraw up to $10,000 a year (to a maximum of $20,000) from your RRSP with no tax at the time of withdrawal and the amount will not be added to your annual income for tax purposes. You will be required to pay the money back within 10 years of withdrawal to avoid any taxes or penalties.

To take advantage of these tax-free opportunities, you will need to complete a request form, which can be found on the CRA website at cra-arc.gc.ca.

It’s always a good idea to consult your financial planner or a tax professional before withdrawing money from your RRSP.

It’s easy. You can open a Zag RRSP account quickly and easily online at zagbank.ca. If you have any questions, we are available to assist you. Call us at 1-844-Zag-Bank (1-844-924-2265) .

We don’t charge fees on your RRSP account. That’s one of the reasons why you bank with us.

The Canada Revenue Agency (CRA) sets limits on the amount of money that Canadians can contribute to registered savings plans. These limits are based on the amount of your income and can be affected by how much money you’ve contributed to your retirement savings in the past. It’s always important to know your limit.  You can find your maximum contribution limit on the annual Notice of Assessment sent by the CRA after your tax return is processed.

For more information and to understand how your maximum is calculated, please visit Canada Revenue Agency (CRA) at cra-arc.gc.ca. (Note : website includes annual maximum contribution limits)

Registered Retirement Savings Plan (RRSP)

You may contribute up to 18% of your earned income from all sources up to a maximum amount set each year by the CRA. If you don’t use all of your contribution room in one year, you can catch up later because the CRA allows you to carry the unused portion from year to year. You can find your maximum contribution limit of the annual Notice of Assessment sent by the CRA after your tax return is processed.

2015 18% of your 2014 income up to $24,930
2016 18% of your 2015 income up to $25,370
2017 18% of your 2016 income up to $26,010
2018 18% of your 2017 income up to $26,230

Note, if you exceed the allowed amount of contribution in your RRSP, you can make a maximum excess contribution of $2,000 without a penalty.

For more information, please check with Canada Revenue Agency (CRA) at cra-arc.gc.ca.

You may contribute to your RRSP anytime during the year or up to 60 days into the following year to qualify for tax deductions. The deadline is always on, or around, March 1st; it can vary by a day or two depending on where the weekend lands. Visit cra-arc.gc.ca to find out the deadline for the current year.

You can make a maximum excess contribution of $2,000 without a penalty. Generally, you have to pay a tax of 1% per month on any contribution that exceeds your RRSP deduction limit by more than $2,000.

For more information, please check with Canada Revenue Agency (CRA) at cra-arc.gc.ca.

When you don’t use all of your contribution room, the excess accumulates year after year. It’s called your 'carry-forward' room. Your total unused contribution room appears on the Notice of Assessment that you receive from the Canada Revenue Agency each year in which you file a tax return.

It’s always a good idea to consult your financial planner or a tax professional to determine the most tax-efficient way to take advantage of unused contribution room.

You can view your Registered Retirement Savings Plan (RRSP) account using Zag Mobile and Zag Online. RRSP transactions such as a beneficiary change or a transfer of an existing RRSP (in whole or a portion of it) cannot be completed through online or mobile banking; you will need to call Zag Client Services at 1-844-Zag-Bank (1-844-924-2265) or send us a request via secure messaging in online banking.

Of course. You will receive an annual statement that shows your contribution for the year plus the first 60 days of the following year. Simply log in to Zag Online and click on the ‘Accounts’ tab, select ‘Statements’, then choose the statement you’d like to view or download.

Once you’ve opened a Zag RRSP GIC or RRSP Savings account, you can transfer money from an existing RRSP account (in whole or a portion of it) you have with another financial institution, to your Zag RRSP account without incurring any tax penalties. Simply follow these few steps::

  • Download a T2033 RRSP Transfer form from the CRA website.
  • Complete ‘Section I – Annuitant or Member’of the T2033 form including parts A, B and C.
  • Mail or fax the T2033 form to us.

Zag Bank
120-6807 Railway St SE
Calgary AB  T2H 2V6

Fax number: 1-877-252-2244

Once we receive your T2033 form, we’ll contact the other financial institution and take care of all the details for you. A typical transfer takes approximately 10 business days after we receive your completed form.

Withdrawals from your Registered Retirement Savings Plan (RRSP) will be subject to an automatic withholding tax (that varies by province and withdrawal amount) and the money will be considered taxable income in the year in which you take it out. You will also forego the long-term growth potential of your investment in a tax-deferred plan.

The Canada Revenue Agency makes two exceptions when it comes to taxing the money that you withdraw from your RRSP. If you’re planning to buy your first home or enhance your skills through training or education, you may qualify for one of these options.

Home Buyers’ Plan (HBP)

The Home Buyer’s Plan is a Canadian government program. If you are buying or building a qualifying first home, it allows you to withdraw up to $25,000 from your RRSP with no tax at the time of withdrawal and the amount will not be added to your annual income for tax purposes. Generally, you have to pay the money back within 15 years of withdrawal to avoid any taxes or penalties.

Lifelong Learning Plan (LLP)

The Lifelong Learning Plan is a Canadian government program. If you plan to enhance your income-earning potential or want to train for a new occupation, it allows you to withdraw up to $10,000 a year (to a maximum of $20,000) from your RRSP with no tax at the time of withdrawal and the amount will not be added to your annual income for tax purposes. Generally, you have to pay the money back within 10 years of withdrawal to avoid any taxes or penalties.

To take advantage of these tax-free opportunities, you will need to complete a request form; which can be found on the Canada Revenue Agency website at cra-arc.gc.ca.

It’s always a good idea to consult your financial planner or a tax professional before withdrawing money from RRSP.

For more information, please check with Canada Revenue Agency (CRA) at cra-arc.gc.ca.

Withdrawals from your RRSP are considered income and therefore may have an impact on the amount you receive from income-tied federal or provincial government benefits or credits.

For more information on how these programs may impact any government benefits you receive, please check with Canada Revenue Agency (CRA) at cra-arc.gc.ca.
 

Zag Bank does not currently offer Registered Retirement Income Fund (RRIF) accounts. You will need to transfer the funds out of Zag into an external account with a financial institution that offers RRIF accounts.

If you’re new to Zag, opening an account with Zag is easy - it’s 100% self-serve through our website. Go to zagbank.ca and click on ‘Open an Account.’ Our secure application process takes about ten minutes using your desktop, laptop, tablet or mobile device. We just need a few things from you:

  • Your name, address and Social Insurance Number (SIN)
  • A valid email address
  • A cheque from a Canadian financial institution with your name on it. Or both names, if you want to open a joint account

Once you become a Zag customer, it’s easy to add new accounts through online banking. Simply log in to Zag Online and select the new account you would like to open.

Note that we do not offer products and services to residents of Québec at this time.

Contributing to your RRSP account is simple.  Simply transfer funds from your external bank account or your Zag internal accounts. 

You also have the option to automatically move funds on a set schedule and not have to worry about transferring the funds every month. This option makes it easier to stick to a personal budget and regularly contribute savings to your portfolio over a long period of time. 
 
 You can decide how much, how often and when you want to start. Remember to check that  you do not exceed your maximum contribtion limit.
 

Your total unused contribution room appears on the Notice of Assessment that you receive from the Canada Revenue Agency (CRA) each year in which you file a tax return.

It’s always a good idea to consult your financial planner or a tax professional when you have questions about contributing to your RRSP.
 

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