RRSP (REGISTERED RETIREMENT SAVINGS PLAN)
An RRSP is a savings plan designed to help employees save for retirement after they stop working. Self-employed people can also participate in the program, and it can be used as an investment vehicle. The pre-tax funds are kept inside of an RRSP account, and it grows tax free until you withdraw the money. However, when you do this, you are taxed at a very marginal rate (usually less than 1%). This means that even if your entire balance is withdrawn at once, you’ll only end up paying taxes on a fraction of what was originally deposited into your account.
The Registered Retirement Savings Plan (RRSP) was enacted by the Canadian government in 1957 and is registered with the Canada Revenue Agency. These laws govern RRSP contributions, asset limits, and withdrawal timings.