Registered Retirement Savings Plan (RRSP)

What is an RRSP?

RRSP stands for Registered Retirement Savings Plan. It is a savings plan designed to help you save the funds you’ll need for retirement throughout your working years. RRSPs are registered with the federal government in order to provide tax savings; at the end of each tax year, you can claim back any income tax you have paid on savings you have placed that year within your RRSP. An RRSP is generally made up of a variety of investments (such as GICs, mutual funds and stocks) that earn additional income throughout your earning years.

What is an RRSP GIC?

A Guaranteed Income Certificate is a type of investment where funds are locked away for a set term and repaid with interest. GICs are considered very low risk because return on the principal investment is always guaranteed. GICs can be placed within an RRSP – any interest earned on the investment will not be taxed as long as it remains within the retirement savings plan.

What is a TFSA?

A Tax-Free Savings Account is an all-purpose savings vehicle designed to give Canadians a flexible, tax-free way to save. Canadians can contribute up to $5,500 annually to the account, with contribution room dating back to 2009. For example, if you are contributing to your TFSA for the first time this year, you have up to $46,500 in contribution room to max out on right away. Investments can be placed within your TFSA and any return made on them will be tax-free.