RRSP lump sum before the deadline vs waiting: the opportunity cost explained

You have $10,000 to put in your RRSP. You could contribute it before the March 1st deadline and get the refund on this year's return. Or you could wait until next year and get the same refund then.

The refund is identical either way. But the growth isn't.

Contributing now gives your money 12 extra months inside the tax shelter. That difference compounds over decades.

The math on waiting

Say you earn $80,000 in Ontario. A $10,000 RRSP contribution generates roughly a $3,150 refund. Whether you contribute in February 2026 or February 2027, you get the same $3,150 back.

But if you wait, that $10,000 sits in a taxable account for an extra year. Assuming 6% growth, you'd earn $600 - then pay tax on it. At a 31.5% marginal rate, that's $189 to the CRA.

Inside an RRSP, that same $600 stays yours. Over 20 years at 6% annual growth, the $10,000 contributed early becomes $32,071. The delayed contribution becomes $30,255. The early bird keeps an extra $1,816.

The gap widens with higher returns or longer time horizons.

When waiting makes sense

Sometimes you don't have a choice. If you're between jobs, changing careers, or dealing with an emergency, the deadline passes. That's fine - RRSP room doesn't expire.

You might also wait if you expect to be in a higher tax bracket next year. A promotion, a big raise, or moving from part-time to full-time work could push your marginal rate higher. The refund would be worth more.

But don't overthink this. The difference in refund between, say, a 26% bracket and a 29% bracket on a $10,000 contribution is $300. The cost of delaying the growth for a year often exceeds that small refund bump.

The catch with early contributions

Contributing early means your money is locked up earlier. RRSPs come with withdrawal restrictions - you can take money out, but you'll pay tax on it and lose the contribution room forever.

If there's any chance you'll need that $10,000 for an emergency in the next few months, a TFSA might make more sense. TFSA withdrawals don't get taxed, and the room comes back the following year.

What about borrowing to contribute?

Some banks will lend you money to make an RRSP contribution, with the idea that you'll pay back the loan using your refund. The math can work if the loan rate is low and the term is short.

But it only makes sense if you were planning to contribute that amount anyway. Borrowing to maximize your RRSP when you don't have the cash flow to support it turns a retirement strategy into a debt strategy.

TaxSplit.ca will show you exactly what your refund would be for any contribution amount, so you can see if borrowing makes the numbers work.

The simple rule

If you have the money and the contribution room, contributing before the deadline beats waiting. The extra year of tax-sheltered growth usually outweighs any marginal benefit from timing the refund.

If you don't have the money, don't create debt to meet an arbitrary deadline. Your future self would rather you contribute when you can afford it than not at all.