An RRSP, or Registered Retirement Savings Plan, is a tax-advantaged retirement savings account in Canada. It is designed to help Canadians save for their retirement by allowing them to invest in a wide range of assets, such as stocks, bonds, mutual funds, and other investments, while offering tax benefits. Here are some key features and aspects of RRSPs:

1. Tax Deductions: Contributions made to an RRSP are tax-deductible, meaning that the amount contributed reduces your taxable income for the year in which the contribution is made. This can result in a lower income tax bill.

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3. Tax-Deferred Growth: Investments within an RRSP grow tax-deferred, meaning you don’t pay tax on the income (interest, dividends, capital gains) your investments generate until you withdraw funds from the RRSP.

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5. Contribution Limits: There are annual contribution limits based on your income. The government sets these limits, and they are designed to encourage Canadians to save for retirement. You can find your personal contribution limit on your Notice of Assessment from the Canada Revenue Agency (CRA).

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7. Carry Forward: If you don’t contribute the maximum amount allowed in a given year, you can carry forward unused contribution room to future years.

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9. Spousal RRSP: A spousal RRSP allows one spouse to contribute to an RRSP in the name of the other spouse. This can be beneficial for income splitting in retirement.

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11. Withdrawals: You can withdraw funds from your RRSP at any time, but withdrawals are considered taxable income and may result in withholding tax. However, you can use the Home Buyers’ Plan (HBP) or the Lifelong Learning Plan (LLP) to make tax-free withdrawals for specific purposes.

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13. Maturity: You can contribute to your RRSP until December 31 of the year you turn 71, at which point you must convert your RRSP into a Registered Retirement Income Fund (RRIF) or purchase an annuity.

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15. Investment Options: RRSPs can hold a wide variety of investments, including stocks, bonds, GICs, mutual funds, exchange-traded funds (ETFs), and more.

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17. Tax on Withdrawals: When you withdraw funds from your RRSP, they are considered taxable income and subject to applicable taxes at your marginal tax rate.

RRSPs are a popular and effective way for Canadians to save for retirement while enjoying tax benefits. They offer flexibility in terms of investments and provide a means of reducing your annual income tax bill. It’s important to plan your RRSP contributions in line with your long-term retirement goals and consider speaking with a financial advisor or tax expert to optimize your retirement savings strategy.

1. 1. Speak with an advisor today