Get retirement ready with an RRSP.
What is a RRSP?
A Registered Retirement Savings Plan (RRSP) is a government approved plan that enables you to save money for your retirement. RRSPs give you security knowing that you will have a head start on your retirement savings.
Annual contribution limits are based on your previous year's earned income. An RRSP accumulates investment returns tax-free and contributions reduce annual taxable income. They can also be accessed to purchase a home through the Home Buyers' Plan or for further education (Lifelong Learning Plan).
A few other things to know:
Annual contribution limits apply
Unused contribution room can accumulate
Tax is deferred
Withdrawals will be included as taxable income for that tax year
RRSPs must be collapsed by the end of the calendar year that you turn 71
Your contributions are tax deductible and income is tax sheltered until you remove funds from your plan. Early withdrawals (before the age of 71) will be subject to a withholding tax, which is taken at the time of the withdrawal and paid directly to the government on your behalf.
What is a RRIF?
By the end of the calendar year in which you turn 71, and RRSP held by you must either be redeemed in full, transferred to an annuity or be converted to a Registered Retirement Income Fund (RRIF).
A RRIF puts you in control of your investment and the amount of income it pays you. A RRIF provides the annuitant with periodic income which is taxed at the effective rate for the year of the receipt. Although you can set the payment amount, frequency and investment options of your RRIF, there is a minimum annual withdrawal amount set by the Canada Revenue Agency.
Funds within an RRIF will continue to be income tax sheltered, but you will pay income tax on the withdrawal amounts. Withholding tax may be deducted from your RRIF payment depending on the amount of withdraws. If you withdraw the minimum amount required per year, no withholding tax will be deducted.
Enjoy the benefits of an RRSP
- Lower your tax – Regular contributions to your RRSP will reduce the tax you owe – especially during your higher income years.
- Grow your money – Because your RRSP is tax-deferred, your earnings will be tax sheltered until you withdraw them in retirement.
- Contribute until you’re 71 – Make annual contributions up to 18% of your earnings up to a government-mandated limit.
- Use a portion of it for your first home without penalty – Speak to a member of our team to learn more.
- Use it to fund part of your education – If you want to continue your education, borrow a portion of the funds without penalty. Speak to us to learn more.
- Multiple investment products are available within an RRSP account – Term deposits and mutual funds included.