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RBC RRSP: Best for working Canadians who like big banks

RBC’s RRSP is a convenient way to build savings for retirement, derive short- and medium-term tax benefits, and manage your assets.

RBC RRSP pros and cons

Pros

Save for retirement and defer taxes on your investments.
Choose the RRSP account and asset mix you’re most comfortable with.
Access to RBC’s digital tools and human advisors, if needed.

Cons

If you’re in a higher tax bracket when you retire, you’ll pay that tax rate on your withdrawals.
Taxes must be paid on early RRSP withdrawals.
Limited ability to use an RRSP to buy a home or fund post-secondary education.

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RBC RRSP full review

RBC’s registered retirement savings plans, or RRSPs, are investment accounts that help the bank’s Canadian customers increase their retirement savings through a combination of compound interest and tax benefits.

RRSPs aren’t the most flexible investment vehicle — withdrawing money early involves costly penalties — but RBC offers several varieties of RRSPs, with each one able to hold a different combination of assets, so investors do maintain a fair amount of control over their accounts.

Types of RBC RRSPs

RBC offers four types of RRSP accounts:

Individual RRSPs are the most common variety of RRSP. All the tax benefits and investments belong to a single investor.
Spousal RRSPs allow a spouse to contribute to an RRSP registered in the other spouse’s name — and receive the tax deduction — without affecting the account holder’s contribution limits.
Locked-in RRSPs, also known as a Locked-in Retirement Accounts, or LIRAs, are for Canadians who leave an employer before retiring and want to manage their vested pension funds.
Group RRSPs are collections of individual RRSPs some employers provide their employees. Contributions are subtracted from pre-tax pay through payroll deductions.

RBC RRSPs can also be categorized according to account management preferences.

People who gravitate toward more traditional investments, like mutual funds, guaranteed investment certificates and savings deposits can get their RRSPs through RBC directly, which comes with the added benefit of accessing the bank’s advisory services.

Those who wish to invest independently and place stocks, mutual funds, bonds, options and exchange traded funds (ETFs) in their RRSPs can do so through the RBC Direct Investing platform.

Investors who want their RRSPs to have exposure to the stock market, but who don’t want to manage their portfolios directly, can use RBC InvestEase, which matches customers to a professionally-built ETF portfolio.

Benefits of RBC RRSPs

The primary benefit of using an RRSP is the ability to increase your retirement savings through the power of compound interest. According to RBC’s RRSP calculator, investing $250 every two weeks for 25 years at an interest rate of 5% would result in over $323,000 of retirement savings.

The other major benefits are tax-related:

RRSP investments are tax-deductible, which can result in smaller tax bills — or larger refunds — come tax time.
Taxes on the income earned by an RRSP are deferred until the money is withdrawn from the account. If your tax bracket is lower when you retire than it was when you made your contributions, you’ll pay less tax on your withdrawals.

Drawbacks of RBC RRSPs

Because RRSP funds are meant to be used after retirement, accessing them early can incur pricey penalties. However, these drawbacks apply to all RRSPs, regardless of the provider.

Early RRSP withdrawal means paying the government a withholding tax, with the tax rate dependent on where you live and how much you’re withdrawing. Removing more than $15,000 from an RRSP, for example, triggers a withholding tax rate of 30%. The money withdrawn also becomes taxable income, which increases your tax burden for the year.

If you’re withdrawing money to purchase a home or pay for post-secondary education, the limits involved are relatively low: $35,000 for home purchases and $20,000 for school. People whose money is tied up in their RRSPs, but who need access to more in order to make these valuable investments, may have to withdraw more — and face the tax consequences. The funds also have to be repaid — within 15 years for those used for home purchases and within 10 years for those put toward education.

What is RBC?

The Royal Bank of Canada is one of Canada’s largest financial institutions and a more or less permanent member of the country’s Big Six banks. In addition to RRSPs, RBC offers a variety of other investment vehicles and banking products, including everyday chequing and savings accounts, mortgages and wealth management solutions.

» MORE: Read our full RBC Bank review

RBC customer satisfaction ratings

RBC Royal Bank ranks first in customer satisfaction with retail banking advice, according to J.D. Power’s 2023 Canada Retail Banking Advice Satisfaction Study, a survey of 2,911 retail bank customers in Canada [1]. BMO Bank of Montreal has the second highest ranking.

RBC Royal Bank ranks third in online banking satisfaction, according to J.D. Power’s 2023 Canada Online Banking Satisfaction Study, a survey of 8,242 retail bank and credit card customers nationwide [2]. BMO Bank ranks highest in online banking satisfaction, while Scotiabank ranks second.

On Trustpilot, RBC has a rating of 1.2 out of 5 possible stars, based on more than 1,100 customer reviews.

On the Better Business Bureau’s website, RBC has a rating of 1.21 out of 5 possible stars, based on more than 130 customer reviews.

Is RBC reliable and secure?

RBC has a high credit rating among the world’s leading ratings agencies, including Moody’s, S&P, and DBRS. RBC owns over $2 trillion in assets and earned more than $56 billion in revenue in 2023.

Your RBC RRSP deposits are insured, too. Through its membership in the Canadian Deposit Insurance Corporation, up to $100,000 in eligible deposits at RBC are guaranteed to be recovered in the event the bank becomes insolvent.

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RBC RRSP details and eligibility

Who qualifies for an RBC RRSP?

To qualify for an RRSP at RBC, you must:

Have earned income and file a tax return in Canada.
Open and contribute to the account no later than December 31 in the year you turn 71.

Who should get an RBC RRSP?

RBC’s RRSPs make sense for employed Canadians who will need to access retirement savings at some point — which is the vast majority of us. They also provide a valuable extra layer of security if you’re already enrolled in a company pension plan.

If you’re a prospective first-time home buyer cobbling together a down payment, you can also use an RRSP’s compound interest to speed up your savings, at least until you reach the $35,000 limit for home purchase withdrawals.

But in order to make regular contributions to an RRSP account, you need to have enough financial flexibility to do it responsibly. Putting more money than a budget can handle into an RRSP each month could result in having to borrow money for emergencies or withdraw funds early and pay steep penalties.

Is an RBC RRSP right for you?

RRSPs aren’t necessarily for everybody. Before moving ahead with opening and funding an RRSP, it’s important to first consider if your age, income and financial goals will allow you to fully benefit from managing one — possibly for decades.

Let’s look at the nuts and bolts of opening an RRSP and then explore some ways to know if RBC’s RRSP offerings are a fit for you.

How to open an RBC RRSP

Method and general steps

If you’ll need advice and assistance from the bank to manage your RRSP, start by:

Calling 1-855-905-4744, selecting the “investments” option from the menu provided and speaking to an RBC investment advisor.
Locating your local RBC branch and calling ahead to schedule an in-person appointment.

If you plan on managing your RRSP by yourself, which means choosing and purchasing which assets go into it, or would rather select from a list of suggested ETFs, you can open an account online through RBC Direct Investing or RBC InvestEase.

Deposit and withdrawal process

You can deposit funds into your RRSP in two ways.

You can make single deposits whenever you feel comfortable. You can do this in person, or online through the bank’s website or app if you have an RBC savings or chequing account.
You can schedule regular contributions that come out of your bank account weekly, bi-weekly or monthly. You can change how much you contribute, or pause contributions altogether, at any time. The more frequently you contribute, the more you’ll wind up saving.

While you can adjust what’s in your RRSP account online, actually withdrawing funds from it requires contacting RBC. You can do that by calling customer service or visiting your local RBC branch. The bank’s website suggests calling 1-833-399-1869 first, to make an appointment.

Remember that withdrawing RRSP funds before you retire can trigger some fairly painful tax consequences, so be sure to weigh the consequences if you need to access the money in your RRSP early.

Customer service options

Because RBC is such a large financial institution, getting the help you need with your RRSP shouldn’t be too challenging. There are multiple phone numbers to call if assistance is needed with opening or managing an RRSP account. In-person appointments with investment advisors can be scheduled.

Questions can also be sent through the messaging portal RBC customers have access to if they set up online banking.

How to maximize the benefits of an RBC RRSP

The simplest way to maximize the benefit of your RBC RRSP is to contribute to it regularly. The more money that goes into an RRSP, the more you’ll benefit from the compound interest it earns.

Making more frequent deposits can help you earn more, too. According to RBC’s RRSP calculator, if you were to deposit $500 monthly for 30 years and score a 5% annual rate of return, you’d wind up saving $416,129. But if you deposited $250 every two weeks, you’d save almost $452,000 — an extra $35,000 for setting aside an additional $500 each year.

Since every dollar that goes into your account is one you can deduct from your taxable income, funding your RRSP to the max each year can help you pay less in taxes. The RRSP contribution limit is usually 18% of your income from the previous tax year, or a predetermined figure calculated by the government, whichever is lower. The contribution limit for 2023, it’s $30,780. For 2024, it will be $31,560.

Another way to take full advantage of the power of an RRSP is to leave your money in it until you retire. Sometimes early withdrawals can’t be avoided, but they can cost you an awful lot in early withdrawal taxes – from 10% on amounts up to $5,000 to a whopping 30% on amounts over $15,000.

If you’re married or in a common law relationship, combining your savings in a spousal RRSP can also help generate better results. If the plan is registered in your partner’s name, you can still claim the tax deduction and your deposits won’t count toward their contribution limit.

RBC RRSP alternatives

An RRSP isn’t the only way to save for retirement. It’s important to consider alternative investments before you commit to a product like an RRSP, which involves some pretty serious tax consequences if you decide it’s not for you. A common alternative to an RRSP is a tax-free savings account, or TFSA.

RRSPs vs. TFSAs

Like RRSPs, TFSAs allow you to save money in a specified account and then invest it in various financial products. You won’t have to pay income tax or capital gains tax on the returns generated by any asset purchased through a TFSA. If your portfolio performs well, you won’t have to worry about forking over any of the profits to the CRA.

TFSAs are also quite flexible. You can make withdrawals at any time and not have to pay a penalty. If that kind of liquidity appeals to you, an RBC TFSA may be more up your alley than an RRSP.

TFSAs have much lower annual contribution limits than RRSPs, though, so getting the same return on investment over the long-term may require savvy strategizing or the assistance of a financial advisor.

Reasons you might want a different retirement savings product

1. Not enough flexibility

RRSPs are not designed to be accessed early. The tax implications of getting your money out before retirement are real, and could eat up a significant portion of your savings.

If you think you might need to access your savings before retirement — for something other than a first home purchase or post-secondary education — an RRSP may not be the right move for you just now.

2. You’re not earning much income

If your income is on the lower end of the pay spectrum, you won’t be able to maximize your savings or get much of a tax break. There’s also the chance of being in a higher tax bracket when you retire than you were while making your contributions. You’ll pay a higher tax rate on your withdrawals, which erodes their value.

3. You plan to retire outside of Canada

If you leave Canada after retirement, you may get taxed twice on your RRSP withdrawals.

Non-residents are typically hit with a 25% tax rate on RRSP withdrawals. If the country you move to doesn’t have a tax treaty with Canada, it may tax you on the money you take out, which will be considered taxable income.

4. You’re set to receive a defined benefit pension

If your employer offers a defined benefit pension, one that pays out a percentage of your income multiplied by the number of years you worked for them, you could end up receiving a fairly generous income during retirement.

An RRSP certainly won’t make your retirement any less comfortable, but the money that comes out of it, combined with your employer’s pension and benefits like the Canada Pension Plan and Old Age Security, could lift you into a higher tax bracket. You’ll see more of your RRSP earnings handed over to the Canada Revenue Agency.

RBC RRSP facts

What is an RRSP?

An RRSP is a unique investment account Canadians can use to increase their retirement savings through a combination of compound interest and tax benefits.
Contributions are used to purchase different assets, including guaranteed income certificates, stocks, bonds and exchange traded funds (ETFs). As the assets appreciate over time, the overall value of the RRSP increases.
The annual contribution limit for RRSPs is typically 18% of a person’s taxable income from the previous year, or an amount decided by the federal government, whichever is lower.
The amount deposited in an RRSP can be deducted from taxable income, which helps decrease annual tax bills throughout the life of the account.
When RRSP funds are eventually withdrawn, the amount taken out gets taxed according to the account holder’s current tax bracket.
Accessing funds in an RRSP before retirement will trigger early withdrawal taxes, which can be as high as 30% if $15,000 or more is being withdrawn. The amount removed from an RRSP will also be added to that year’s taxable income.
RRSPs can be tapped before retirement without triggering any penalties if the funds are used for a first home purchase or to pay for post-secondary education.

RBC RRSP interest rates

The interest RBC pays on RRSP funds is essentially nothing, but bank interest isn’t where most RRSP growth comes from. For that, you’ll have to choose a diversified portfolio of investments with the potential to deliver steady gains.

Ongoing interest rate as of January 2024

At the time of this writing, RBC pays an interest rate of 0.9% on funds that are deposited into RRSPs but not allocated to any other assets.

RBC RRSP minimum balance

There is no minimum balance required to open or maintain an RBC RRSP.

RBC RRSP contribution limit

Your exact RRSP contribution limit for each year can be found in your most recent Notice of Assessment from Canada Revenue Agency, which you’ll receive after filing your taxes.

The amount you’ll be able to deposit in a calendar year is typically 18% of your earned income from the previous year, or the maximum amount laid out by the government, whichever is lower. The maximum contribution amounts for 2023 and 2024 are $30,780 and $31,560, respectively.

There is no limit on the number of RRSPs you can have, but there’s only one contribution limit. Deposit totals for all your RRSPs combined can’t exceed that amount.

RBC RRSP fees

Monthly fee

RBC does not charge a monthly fee for its RRSPs.

Transfer fee

Whether your RRSP was opened with Royal Bank directly, through RBC InvestEase or through RBC Direct Investing, you’ll have to pay a fee of $150 to transfer the RRSP outside of RBC.

Withdrawal fee

RBC does not charge a withdrawal fee on RRSPs. You will have to pay a withholding tax, though, and the funds you withdraw will be added to your taxable income for the year, but these charges go to the government, not the bank.

Other features and benefits of an RBC RRSP

In addition to everything you’ve learned so far, RRSPs have a few other interesting features:

Your unused RRSP contributions don’t expire. If you aren’t able to hit your contribution limit this year, the remaining amount can be topped up in a later tax year without counting against that year’s contribution limits.
Creditors can’t get to your savings. In the unfortunate event that you have to declare bankruptcy, the money stored in your RRSP is off limits to creditors — with the exception of the money contributed in the year bankruptcy was declared.
No tax on interest earned. The interest generated by the GICs or bonds in your RRSP doesn’t get taxed as it’s earned.
Some flexibility. Because making withdrawals before retirement can cost you, RRSPs aren’t especially flexible. But there is some freedom when it comes to determining how you manage your account. You can do it yourself, through an investment manager or by using an RBC robo-advisor, which can be accessed through RBC InvestEase.
Secure retirement income. Once December 31 rolls around in the year you turn 71, you’ll have to withdraw the funds from your RRSP. One option is to convert it to a Registered Retirement Income Fund, or RRIF. You’ll be able to make regular withdrawals to help fund your retirement, and you won’t have to pay withholding taxes on them.

In most cases, yes. RRSPs can help increase your retirement savings significantly and score some tax relief while you’re funding your account. But to make the most of an RRSP, you’ll need to deposit as much money as you can and avoid early withdrawals.

RRSP withdrawals can be accomplished by calling RBC’s customer service department over the phone, or visiting a branch. In certain situations, RRSP withdrawals can also be processed through RBC’s online banking message centre. Know that any RRSP withdrawals made before you’re retired will result in tax penalties.

RBC RRSP Review: Pros, Cons and Who It’s For

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