What Is a Registered Retirement Savings Plan?
A Registered Retirement Savings Plan (RRSP) is a savings plan intended to help Canadians prepare for retirement by setting money aside and receiving tax benefits for doing so. Such plans are designed to create an incentive for savings by rewarding people with tax breaks on their contributions and income earned from the plan. They are registered with the government, and when people are ready to retire, they can start drawing on the plan as a source of income. There are several tax advantages to such plans. Any contributions come with deferred taxes, allowing people to reduce taxable income while they are working. In addition, interest earned on a Registered Retirement Savings Plan also comes with deferred interest. People with such plans can draw on them in emergencies like periods of unemployment without fees, allowing people to support themselves during periods of financial hardship with the money they have saved.
