RRSP's & RRIF's
Registered Retirement Savings Plan (RRSP)
Save for retirement and save on taxes.
A Registered Retirement Savings Plan is a government approved plan to help you save money for retirement. Contributions are tax deductible, and the income earned is tax sheltered (some restrictions apply). You can have more than one plan.
The purpose of an RRSP is to invest money when you can most afford it - during your peak earning years - to build up a comfortable retirement fund. Not only do you invest some money that would otherwise be paid in taxes, but the earnings of your plan are not taxed until you withdraw them.
The first stage of an RRSP is to accumulate retirement savings. The next stage is to provide retirement income. Your accumulated savings may be invested in a variety of options to provide a retirement income which can continue for life or to age 90. Only the retirement income payments are taxed each year as you receive them, thus spreading the taxation of your accumulated savings over your retirement years.
You can invest the funds in your RRSP in Term Deposits/GIC's and Index-Linked Term Deposits. Mutual Funds are also available through Credential Asset Management Inc.
Registered Retirement Income Funds (RRIF)
RRIF's are the most popular option for converting savings plans. An RRIF is like a continuation of your RRSP. Your funds remain tax sheltered, and you continue to choose how your funds are invested. But instead of putting money into a RRSP, the RRIF is designed to pay money out as income for you to live on.
You cannot contribute directly to a RRIF. Funds can be transferred from an RRSP, another RRIF a RPP, a DPSP or a commuted RRSP annuity. You can choose any payment level, as long as the total each year is at least equal to the mandatory minimum amount. There is no maximum payment level.
With many RRIF's you can fluctuate your payments above the minimum from year to year. The higher the payments you take, the sooner your funds will be depleted. RRIFs can continue for the lifetime of the holder or their spouse.
You can invest the funds in your RRIF in Term Deposits/GIC's, Index-Linked Term Deposits. Mutual Funds are also available through Credential Asset Management Inc.