What Is a Registered Retirement Savings Plan (RRSP) in Canada?
An RRSP is a retirement savings plan that you (your spouse or common-law partner) can contribute to. By making RRSP contributions, you can deduct those contributions from your taxable income. This will lower your tax bracket for the current year. They are considered investments for your future retirement. The taxes are not avoided, they are a tax deferral.
Types of RRSPs
Individual
Spousal
Group
How do RRSPs operate in Canada?
It’s a tax-advantaged account, which means that the government of Canada created them to provide tax breaks to people who invest their money into RRSPs as a way to motivate them to save money for their retirement.
RRSPs are tax-deferred, meaning any money you contribute will be exempt from CRA tax the year you make the deposit, and will only be taxed years down the line when you withdraw it. RRSPs are a great way to save on a current-year’s tax bill. Remember it is a tax deferral though and eventually, you will need to pay taxes, hopefully at a more tax advantageous time in your life.
How to open an RRSP in Canada.
It’s as easy as speaking with one of our MS Insurance Associates. They will do a full financial assessment with you to find out what you need from your investments to retire in a way that meets your needs and goals. An assessment can take 20 minutes to an hour and is well worth the investment of your time.
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