About Registered Accounts
Registered Retirement Savings Plan
A Registered Retirement Savings Plan, or RRSP, is a tax-sheltered savings plan that allows you to earn income on a tax-deferred basis. Income earned within the plan is not taxed until withdrawn from the registered plan. Contributions to your RRSP can be deducted (up to your RRSP contribution limit) against your income on your annual income tax return which allows you to reduce taxes payable in the year of contribution.
An RRSP allows you to defer paying taxes on retirement earnings during your prime income earning years. Upon retirement, you can withdraw funds when you may be in a lower tax bracket.
A Spousal RRSP is similar to a regular RRSP, except that a Spousal RRSP is registered in your spouse's (or common-law partner’s) name while you, as the contributing spouse, take a full tax deduction for all the contributions you make to the spousal plan. There are substantial income splitting tax savings available from a properly balanced spousal RRSP and personal RRSP. Consult your financial advisor for more details.
Registered Retirement Income Fund
By the end of the year in which you turn 71 your RRSP must be deregistered or converted into another registered account type that pays income to you. RRIFs are the most popular conversion option for RRSPs.
Funds held in RRIFs are tax-sheltered like RRSPs, however, the federal government requires a minimum annual withdrawal based on your age or the age of your spouse. All withdrawals from a RRIF are included in your taxable income for the year.
With a RRIF, you and your financial advisor have control over your investments. You may change your asset mix or increase your annual withdrawal as your personal circumstance change.