RRSP (Registered Retirement Savings Plan)
Quick Definition
A tax-deferred savings account for retirement, with deductible contributions.
Full Explanation
An RRSP (Registered Retirement Savings Plan) is a Canadian government-registered savings account that allows contributions up to 18% of the previous year's earned income (up to an annual limit — $31,560 for 2024). Contributions are tax-deductible, reducing your taxable income in the year of contribution. Investment growth inside the RRSP is tax-sheltered. Withdrawals are taxed as income. RRSPs must be converted to a RRIF (Registered Retirement Income Fund) by December 31 of the year you turn 71. The Home Buyers' Plan allows first-time buyers to withdraw up to $35,000 tax-free.
Related Terms
TFSA (Tax-Free Savings Account)
A flexible registered account where investment growth and withdrawals are completely tax-free.
RRIF (Registered Retirement Income Fund)
A mandatory account RRSP converts to at age 71, requiring minimum annual withdrawals.
Home Buyers' Plan (HBP)
Allows first-time buyers to withdraw up to $35,000 from their RRSP tax-free for a home purchase.
Tax-Deferred
Growth or income that is not taxed until withdrawal, allowing faster compounding.
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