RBC RRSP: Everything you need to know

Planning for retirement is a top priority for many Canadians, and a registered retirement savings plan (RRSP) is one of the most effective tools available. An RRSP allows you to save and invest for retirement with tax-deferred growth. This means that the contributions reduce your taxable income while the investments grow tax-free until withdrawal.

RRSPs work differently depending on the provider. If you like the idea of opening one with an established financial institution, RBC RRSP may be worth considering.

In this article, Wealth Professional Canada gives you an overview of the RRSP offerings from the country’s largest bank. We will walk you through the different features and services. We will also break down the benefits and potential drawbacks of enrolling in a registered retirement savings plan from RBC.    

Whether you’re just getting started with your retirement savings or looking to fine-tune your existing plan, this guide can help. Read on to find out everything you need to know about RBC RRSPs, so you can decide whether it’s the right fit for your retirement strategy.

How does RBC RRSP work?

RBC RSSP works just like other registered retirement savings plans. The contributions made are tax-deductible, allowing the investments to grow on a tax-deferred basis until they are withdrawn. This enables you to build a retirement fund while reducing your taxable income, making an RBC RRSP ideal for long-term planning. Here’s an overview of the basic rules:

RBC RRSP eligibility criteria

To qualify for an RBC registered retirement savings plan, you must:

• be a Canadian resident with a Social Insurance Number (SIN)
• have earned income and file a tax return in Canada
• open and contribute to your plan not later than December 31 of the year you reach age 71

RBC RRSP contributions

RRSP rules state that you can contribute whichever is lower of:

• 18% of your earned income from the previous year
• $31,560, which is the maximum contribution set by the Canada Revenue Agency (CRA) in 2024

To qualify for an RRSP deduction, you must make contributions during the tax year, or up to 60 days into the following year.

RBC RRSP withdrawals

Withdrawals from your RBC RRSP are taxed as income and may trigger withholding tax. However, there are exceptions:

• the Home Buyers’ Plan (HBP) lets you withdraw up to $60,000 per calendar year to buy or build your first home
• the Lifelong Learning Plan (LLP) allows you to borrow up to $10,000 a year to a maximum of $20,000 over four years to go back to school full-time

RBC RRSP fees

RBC RRSPs come with various fees depending on the type of account and investments. You may encounter management fees, trading fees, or annual administration fees. It’s important that you understand these costs as they can affect your overall returns.

What are the different types of RBC RRSPs available?

RBC offers several types of RRSPs designed to fit different financial needs:

• Individual RRSP: This is the most popular and straightforward RRSP offered by the banking giant. The plan is registered in your name, and you get full control over the investments under it.
• Spousal RRSP: This is a great way to balance your retirement savings if you’re married and one partner earns significantly more than the other. Spousal RRSPs offer an income-splitting advantage for couples where the contributing spouse receives the tax deduction, while the account is registered in their partner’s name.
• Locked-in RRSP: If you leave your job and have vested pension funds, you might be offered the option to transfer those funds into a locked-in retirement account (LIRA). As the name suggests, this type of RBC RRSP keeps your funds “locked-in” until retirement, with specific rules on withdrawals.
• Group RRSP: Many employers offer a group RRSP, where contributions are deducted directly from your paycheque before taxes. This setup can help you save consistently and reduce your taxable income immediately. If your employer chooses to match contributions, it can give your retirement savings an extra boost.

Learn more about how registered retirement savings plans work in this guide.

What are the investment options in an RBC RRSP?

One of the biggest benefits of opening an RRSP with RBC is the wide range of investment vehicles you can choose from. These asset classes cater to investors with different levels of expertise, risk tolerance, and investment preferences.

RBC Royal Bank

The standard method for managing RBC RRSP investments, this can be a good option if you’re a first-time investor or feel like you don’t have enough investment know-how. An experienced RBC portfolio manager will make investment decisions and monitor the market for you. You can contact these professionals via phone or video.

RBC Royal Bank offers several investment products designed to boost your RRSP savings. These include:

Mutual funds

RBC offers a range of mutual funds, including equity, fixed income, and money market funds. You can have a professionally managed portfolio for an initial investment of $500. You can also have free access to tools and resources to keep you updated on your investment performance. These include MyAdvisor, RRSP calculator, and the investment performance snapshot tool.

Guaranteed investment certificates (GICs)

If you’re looking for lower-risk investments, GICs provide guaranteed returns over a set period. GICs can be a good option if you want stability and security in your investments. You can use the GIC selector to pick an investment that suits your financial goals.

RBC also provides online tools to help maximize your investments, including the GIC laddering tool, and the income builder and returns calculators.

Savings deposits

If you’re not sure about how to invest your money, an RBC savings deposit can be a good fit. These savings accounts provide another low-risk option within an RBC RRSP. There’s no minimum deposit required. You can also switch to mutual funds or GICs whenever you want.

Mutual funds vs. GICs – what’s the difference? Here’s what every investor should know.

RBC Direct Investing

The banking giant offers investors who want full control over their investments a self-directed platform through RBC Direct Investing. You can do the market research on your own and manage your portfolio without assistance from an RBC money manager. With RBC Direct Investing, you can invest in:

• stocks traded in Canadian and US exchanges
• exchange-traded funds (ETFs) on all major North American exchanges
• guaranteed investment certificates with competitive rates and different terms
• new issues or initial public offerings (IPOs) available through an investment services representative
• mutual funds, including money market, fixed-income, equity, and balanced funds
• bonds in one of Canada’s largest bond inventories, including government, high-yield bonds, and strip bonds
• gold and silver certificates in US dollars and available through an investment services representative
• advanced trading options where you can buy call and put options and write covered calls

Keen on investing in RBC stocks? Check out this guide for more information.

RBC InvestEase

This is RBC’s roboadvisor service designed for investors who prefer a more hands-off approach. All you have to do is answer a few questions and RBC InvestEase will match you to an ETF portfolio adjusted automatically based on your risk profile.

If you’re interested in aligning your investments with certain ethical standards, RBC InvestEase also offers sustainable portfolio options. These portfolios focus on investments that meet environmental, social, and governance (ESG) criteria.

RBC InvestEase charges an annual management fee of 0.50% on top of applicable sales tax. This is billed monthly based on your account’s average assets under management (AUM). For the ETFs held in your portfolio, a weighted average management expense ratio of 0.11% to 0.23% applies.

What are the pros and cons of RBC RRSP?

An RBC RRSP can be a great tool for building your retirement savings, but like any financial product, it has its benefits and drawbacks. Here’s a breakdown of the pros and cons:

Pros of an RBC RRSP

• Diverse investment options: RBC RRSP provides a range of investment options that fit different risk profiles and financial goals. You can choose to invest in mutual funds, stocks, GICs, ETFs, bonds, and precious metals. There are also advanced trading and responsible investing opportunities.
• Access to tools and professional advice: RBC has experienced portfolio managers who you can contact by phone and video. These professionals can assist you in creating a personalized investment plan within your RRSP. You can also access tools and resources to help you make informed decisions and maximize your retirement savings.
• Integrated banking and investing: RBC offers seamless integration between your banking and investing accounts through the RBC online banking platform. This allows you to easily move money between your accounts, automate contributions, and manage your finances in one place. This also makes it easier for you to stay on top of your retirement savings plan.

Cons of an RBC RRSP

• Varying fees: RBC RRSP may impose fees for its different services and investments. Depending on the type of investment, you may be charged management fees for maintaining your account or trading fees for buying and selling stocks. These fees may be small at first glance, but once they add up over time, they can affect your returns.
• Complex investment choices: Having plenty of investment options can often be seen as an advantage, but it can also be overwhelming. If you’re not that familiar with investing, choosing between different investment products can be confusing.
• Withholding taxes on withdrawals: As with other RRSPs, the funds withdrawn from an RBC RRSP are considered taxable income. The withholding taxes range between 10% and 30% depending on how much money you take out. This tax hit can be huge, especially if you withdraw a significant amount.

Understanding these advantages and disadvantages can help you decide whether an RBC RRSP matches your financial goals and retirement plans.

How do you open an RBC RSSP?

There are two ways for you to open an RBC registered retirement savings plan:

• call 1-855-905-4744, then select the “investments” option from the menu and speak to an RBC investment advisor
• visit your local RBC branch, but be sure to schedule an in-person appointment by calling 1-888-466-1086

If you plan on managing your RRSP by yourself, you can open an account online through RBC Direct Investing or RBC InvestEase.

For contributions, you can make deposits on your RBC Online Banking chequing or savings account or the RBC Mobile app. Just follow these steps:

RBC Online Banking

1. Sign in.
2. Choose your RRSP from the accounts summary page.
3. Click “contributions” from the left menu.
4. Follow the on-screen instructions.

RBC Mobile app

1. Sign in.
2. Tap “move money.”
3. Select “transfer between my accounts.”
4. Select your eligible RBC Royal Bank RRSP account.
5. Follow the on-screen instructions.

You can schedule regular contributions weekly, bi-weekly, or monthly. You can also change how much you contribute or pause contributions any time.

Is RBC a good place to get an RRSP?

Considered as one of the Big Five banks, the Royal Bank of Canada (RBC) is the largest financial institution in the country. RBC ranks number one among all Canadian banks in terms of market capitalization and places on the top 10 globally.  

RBC boasts an extensive range of products and services in multiple sectors, including:

• personal and commercial banking
• insurance
• wealth management
• capital markets
• investor and treasury services

In the latest fiscal year, the banking giant reported a net income of $14.9 billion. This highlights the institution’s stability and strong performance despite challenging market conditions.

RBC can be a good option for your RRSP needs if you’re searching for a provider that boasts an extensive digital platform and network of experienced financial advisors. The varying fee structures and investment options, however, can be overwhelming if you’re new to investing.

Visit our Retirement Planning News Section for more tips and strategies on how to maximize your registered retirement savings plans. Be sure to bookmark this page to access breaking news and the latest industry updates.

Do you have experience with an RBC RRSP? How was it? Let us know in the comments.