A Registered Retirement Savings Plan or
RRSP is a type of savings account that is registered with the federal government that Canadians can use to save for retirement. An RRSP gives you certain tax advantages like:
tax-deductible contributions, tax-sheltered compounding, and tax deferring. This means,
you put money in pre-tax (or you get a tax refund!) it grows without being taxed, and later on, when you take money out during retirement, it’s often taxed at a lower rate. We’ll talk more about these benefits in Part 2. But first, it’s important to understand that an RRSP isn’t an investment product that you buy. Rather, an RRSP account is like a bucket that you can fill with investment products. Stocks, bonds, mutual funds, exchange traded funds, and guaranteed investment certificates are just some of the different kinds of investments you can put into your RRSP. There are annual limits to how much you can contribute to an RRSP, which we’ll talk more about in Part 3. Once you make a contribution, you can buy/sell investments, or change the investments you own. As long as your cash, investments, and any returns on your investments stay inside your RRSP account, generally there won’t be tax implications. You can open an RRSP account at many financial institutions like banks, credit unions, investment firms, or
online investing platforms. You can also have multiple
RRSP accounts with different institutions. For example, you might have a group RRSP with your employer— where contributions are
deducted automatically from your paycheck and also have an individual RRSP at your bank —where you contribute extra savings. Be careful that the sum of contributions to all of your RRSP accounts doesn’t exceed your available contribution room, which you can find on your annual Notice of Assessment from the Canada Revenue Agency. How much money you make in your RRSP depends on the overall
performance of your investments, minus any associated fees. Learn more at GetSmarterAboutMoney.ca Brought to you by the Ontario Securities Commission, Investor Office