Most RRSPs Are Protected in Bankruptcy: What You Need to Know
If you’re considering bankruptcy in Canada, one of your biggest concerns might be what happens to your retirement savings. Thankfully, most Registered Retirement Savings Plans (RRSPs) are protected under the Bankruptcy and Insolvency Act (BIA)—but there are important exceptions.
RRSPs and the 12-Month Rule
Under section 67(1)(b.3) of the BIA, RRSP contributions made more than 12 months before filing for bankruptcy are exempt from seizure. However, any contributions made within the 12 months leading up to your filing are not protected and can be claimed by the bankruptcy trustee.
💡 If you haven’t contributed to your RRSP in the last year, you won’t lose any of your retirement savings.
What About Other Retirement and Savings Accounts?
✅ Company or Government-Sponsored Pensions (RPPs)
These are fully protected, including all employer and employee contributions, regardless of when they were made.
✅ Locked-In Retirement Accounts (LIRAs)
Because LIRAs are not accessible until retirement, they cannot be seized in bankruptcy.
✅ RRIFs and DPSPs
Similar to RRSPs, contributions made in the last 12 months may be at risk, but otherwise these accounts are generally protected.
✅ RDSPs (Registered Disability Savings Plans)
These are typically protected, and courts have generally ruled that creditors cannot access RDSP funds.
Real-Life Scenarios
Example 1: Your employer contributes 5% of your salary to a pension. This pension is fully protected—even contributions made last month.
Example 2: You have an RRSP with life insurance benefits and your spouse as the beneficiary. This plan is protected, including recent contributions.
Example 3: You contribute automatically to your RRSP from your paycheque. Contributions made within the last 12 months may be seized in bankruptcy.
Your Options for Recent RRSP Contributions
If you’ve contributed to an RRSP in the last 12 months, here’s what you can do:
- Let the trustee withdraw the amount contributed within the 12 months.
- “Buy back” the value of those contributions by paying that amount into the bankruptcy estate.
- File a consumer proposal to preserve all of your RRSP—including recent contributions.
TFSAs and RESPs: Not Protected in Bankruptcy
Not all registered savings accounts have the same legal protections:
❌ TFSAs (Tax-Free Savings Accounts)
These must be surrendered during bankruptcy. They are considered non-exempt assets.
❌ RESPs (Registered Education Savings Plans)
Also not protected. However, you can buy back the value to keep saving for your child’s education.
💡 Want to protect your TFSA or RESP? A consumer proposal may be the better solution than bankruptcy.
What About Spousal RRSPs?
Bankruptcy affects only RRSPs in your name. If you contributed to a spousal RRSP, only the last 12 months of contributions are at risk—and only if you file for bankruptcy.
If your spouse goes bankrupt, the spousal RRSP you contributed to is not affected—unless you made contributions within the last year.
Don’t Cash Out Your RRSP to Pay Debt
It’s tempting to withdraw funds from your RRSP to deal with overwhelming debt—but in most cases, this only hurts your long-term security.
Because RRSPs are largely protected in bankruptcy, it’s usually smarter to keep your savings intact and explore formal debt relief options instead.
Protect Your Future: Bankruptcy vs Consumer Proposal
Bankruptcy may eliminate your debt quickly—but a consumer proposal helps you protect assets like:
- Recent RRSP contributions
- TFSAs
- RESPs
With a consumer proposal, you can:
- Settle your debt for less
- Keep your savings
- Stop collection calls and wage garnishments
Talk to a Licensed Insolvency Trustee
Whether you’re worried about retirement savings, creditor pressure, or simply don’t know where to start—a Licensed Insolvency Trustee can help you explore all your options and recommend the best path forward.
✅ Confidential advice
✅ No judgment
✅ Protect what matters most
