Registered Retirement Savings Plan (RRSP)
A Registered Retirement Savings Plan (RRSP) is a retirement savings account available at most financial institutions. We collaborate only with institutions that support electronic document signing and submission. The Canadian government sets annual RRSP contribution limits, typically the lesser of 18% of your earned income or $$30,780 in 2023. You can hold various types of investments within your RRSP, such as stocks, bonds, GICs, mutual funds, ETFs, and more. Contributions to an RRSP provide a dollar-for-dollar income tax deduction, lowering your taxable income for that year. The funds grow tax-deferred until you withdraw them.
Types of RRSP Accounts
Individual RRSP:
This account is ideal for individuals without a pension match from their employer. It offers the benefits of tax deductions, tax-deferred growth, and flexibility to choose from a wide range of eligible investments.
Spousal RRSP:
Contributions to a Spousal RRSP allow you to split retirement income, potentially placing you in a lower tax bracket. Although contributions to a Spousal RRSP count against your personal limit, this strategy can be an effective way to reduce taxes in retirement.
Group RRSP:
Set up by employers, Group RRSPs often include a contribution match ranging from 2% to 5% of your income. For example, if you contribute 5% of your salary, your employer may match that amount, doubling your contribution before any interest is earned. Contributions are deducted from your paycheck before taxes, which reduces your taxable income. Additionally, funds in Group RRSPs usually have lower fees compared to those in individual or spousal RRSPs.
