An RSP (Retirement Savings Plan) is a type of financial account in Canada for holding savings and investment assets. An RRSP (Registered Retirement Savings Plan) is a specific type of RSP that has various tax advantages compared to investing outside of tax-preferred accounts. Some key points to note about RRSPs include:
- RRSP contributions are tax-deductible, meaning that they can be deducted on your current year tax return, potentially reducing the total amount of taxes you pay.
- Investment income earned from these investments is tax-deferred in the RRSP until you withdraw the funds.
- RRSPs are a means of saving for retirement and are available to employees and self-employed individuals in Canada.
- RRSPs have various investment options, including mutual funds, stocks, bonds, and exchange-traded funds (ETFs) .
- RRSPs have contribution limits that are based on your income and can change from year to year.
- Other types of RSPs include Registered Pension Plans and Non-Registered Accounts, which offer their own advantages and disadvantages.
Its important to note that RSP and RRSP are often used interchangeably, but RRSP specifically refers to the registered type of RSP.
