Registered Retirement Savings Plan (RRSP)

Registered Retirement Savings Plan (RRSP)

Registered Retirement Savings Plans (RRSPs) are savings plans registered with the Canada Revenue Agency (CRA) into which you contribute savings or investments for retirement. An individual may have several RRSP accounts. Canadians invest in RRSPs for two primary reasons. They can reduce their overall tax bill by making a contribution, and the income earned within the RRSP is tax-sheltered until it is withdrawn.

Spousal Retirement Savings Plan

A spousal RRSP can be an effective method of income splitting. By directing part of your annual contribution into a Spousal RRSP you can build a separate retirement fund for your spouse and gain the benefit of a tax deduction now.

Here is how it works:

• Each year, you can split your allowable contributions between your RRSP and a separate Spousal RRSP set up for your spouse
• You receive the same deduction as if you were contributing to a single RRSP
• This allows you to save taxes during your retirement years by splitting your retirement income with your spouse

Generally, any withdrawals from the plan are taxed in the spouse's hands. However, funds withdrawn from the plan in the year of the contribution or the two years previous are taxed in the contributor's name. This type of plan is available to married or common-law couples.

Locked-in Retirement Account (LIRA)

Upon leaving your employer (i.e. for a position with a new employer or for retirement) you have two options available for any pension benefits you have accumulated. You can decide to leave the money with your former employers pension fund or remove it.

Since both the federal and provincial governments do not permit you to convert your pension into cash, an alternative is to transfer locked-in funds from a registered pension plan to a separate RBC Direct Investing RRSP called a Locked-in Retirement Account (LIRA).

Restricted Locked-In Savings Plan (RLSP)

Restricted Locked-In Savings Plans (RLSPs) are able to accept transfers from Restricted Life Income Fund (RLIF) plans for individuals who wish to return RLIF assets into a locked-in plan and are younger than 71 years of age. You may want to make such a transfer if you do not want a steady stream of retirement income at the time.

Transfers from an RLSP by the holder will only be permitted if they are into another RLSP, into an RLIF or into a life annuity (not available through RBC Direct Investing).