Any Canadian resident who has an earned income and is below age 71 can open a RRSP. Let’s grab some more useful details on who is eligible for RRSP in Canada.
RRSP in Canada
Registered Retirement Savings Plan is an authorized savings tool that will help you save up for retirement in a tax effective way. Any registered savings plan has its own set of terms and conditions. Let’s find out the eligibility criteria to open a RRSP in Canada.
What are the types of RRSP in Canada?
1. Individual Account:
This is established in the name of a single person and he/she is the only one who contributes into the account.
2. Spouse Account:
Example X & Y are partners in law. X is on the higher salary bracket & Y is on the lower salary bracket. A spousal RRSP can be opened by X in the name of Y. Contributions can be made by X into Y’s account, up to X’s contribution limit.
Group Account:
This is generally offered by employers to employee. It is similar to an individual RRSP; however, the contributions get deducted from your salary. This improves your savings habit.
Who is eligible for RRSP in Canada?
- You must be a resident of Canada.
- You must be below age 71. To validate your age, you must provide two identification proofs with your name, age and address. It is preferable that at least one of it is provided by the government of Canada.
- There is no minimum age limit to open an RRSP. However, some financial institutions will want you to be 18 years or above to open a RRSP with them.
- You should have earned income in Canada.
- You should have filed income tax returns with the Canadian Revenue Agency (CRA).
When will my RRSP account get closed?
You are not eligible to have your RRSP opened after 31st December of the year in which you turn age 71. For example, if you were born on 28th of January 1994. You will turn 71 in 28th of January 2065. You must close your account on or before 31st of December 2065.
RRSP and its eligibility
RRSP is a registered investment plan that is solely intended to be used for retirement. Most Canadians retire at the age of 65. Hence, it is logical of the government to keep the maximum age capped at 71, given its tax concessional nature.