Plain meaning
A registered retirement savings account where contributions may be deductible and withdrawals are generally taxable.
Also called
Registered Retirement Savings Plans
Background
RRSPs have existed in Canada since 1957 as a tax-deferred retirement savings vehicle.
Key points
- RRSP contribution room is generally based on earned income from the previous year, up to an annual limit, minus pension adjustments where applicable.
- Contributions may reduce taxable income for the year claimed, subject to available RRSP deduction room.
- Investment income earned inside an RRSP is generally not taxed while it remains in the plan.
- Withdrawals are generally included in income and may be subject to withholding tax at the time of withdrawal.
- Special programs, such as the Home Buyers' Plan and Lifelong Learning Plan, can allow eligible withdrawals under specific repayment rules.
Why it comes up
RRSP deadlines, contribution room, Home Buyers' Plan changes, and retirement-policy updates can affect personal tax planning.