RRSP — Registered Retirement Savings Plan

A Summary of RRSP

A Registered Retirement Savings Plan (RRSP) is designed to help individuals accumulate retirement income while benefiting from tax deferral. Contributions are generally tax-deductible, subject to annual limits based on earned income, and investments grow on a tax-deferred basis. Withdrawals are fully taxable as income when taken, usually during retirement when the individual may be in a lower marginal tax bracket. RRSPs are most suitable for clients seeking long-term retirement savings, current tax reduction, and systematic wealth accumulation.

RRSP Plus Points

• Tax-deductible contributions, subject to annual limits based on earned income

• Tax-deferred investment growth until withdrawal

• Can hold a wide range of investments, including segregated funds when offered by an insurer

• May be used for special programs such as the Home Buyers’ Plan (HBP) and Lifelong Learning Plan (LLP)

• Can be converted at maturity into a RRIF or annuity to provide retirement income

Best for

• Individuals expecting a lower tax rate in retirement

• Clients in higher tax brackets now

• Long-term retirement planning

Key features

• Contributions are tax-deductible

• Investments grow tax-deferred

• Withdrawals taxed as income

• Annual contribution limit based on income (18% up to annual max)

Objective

• Encourage individuals to accumulate retirement savings by allowing tax-deductible contributions and tax-deferred growth until retirement.

Who Can Open

• Any individual with earned income and available RRSP room