{"id":210642,"date":"2024-11-03T07:00:00","date_gmt":"2024-11-03T12:00:00","guid":{"rendered":"https:\/\/milesopedia.com\/news\/rrsp-vs-rsp-in-canada\/"},"modified":"2024-11-03T12:00:08","modified_gmt":"2024-11-03T17:00:08","slug":"reer-vs-rer-canada","status":"publish","type":"post","link":"https:\/\/milesopedia.com\/en\/personal-finance\/investing\/reer-vs-rer-canada\/","title":{"rendered":"RSP or RRSP: What’s the difference?"},"content":{"rendered":"

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When it comes to financial planning for your retirement, it’s essential to be aware of the many options available in Canada. However, the names and acronyms of financial products can often be confusing. If this is the case, you’re not alone. For example, you’ve probably heard of RSP or RRSP<\/strong>. Perhaps you’ve used them interchangeably. They may sound similar, but they’re not. That’s what we explain in this article. <\/p>\n

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<\/div>\n\t\t<\/div>\n\t<\/div>\n<\/article>\t\t<\/div>\n\n\t\t<\/div>[\/vc_column][\/vc_row][vc_row][vc_column][vc_custom_heading text=”RSP or RRSP: What's the difference between these savings plans?” css=”” el_id=”rsp_or_rrsp_what_039_s_the_difference_between_these_savings_plans_”][vc_column_text css=”” el_class=”checkmarks”]<\/p>\n

A Retirement Savings Plan (RSP) allows you to save for retirement through several types of accounts. On the other hand, a Registered Retirement Savings Plan<\/a> (RRSP) is an account used to save for retirement on a tax-sheltered basis. However, RRSP contributions are limited to 18% of the previous year’s eligible earnings, up to the RRSP contribution limit<\/a> set by the Canada Revenue Agency (CRA<\/a>). <\/p>\n

The RRSP is one of many accounts that are part of an RSP, along with the registered pension plan (RPP) and many others. In other words, an RSP is a type of RSP, but an RSP is not (always) an RSP. <\/p>\n

To make matters even more complex, there are differences between “registered savings plan”, “retirement savings plan” (RSP) and “registered retirement savings plan” (RRSP). Note that the term “registered” is sometimes included, sometimes not. The same applies to the term “retirement”. This is where the main differences lie. <\/p>\n

[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_custom_heading el_id=”what_is_a_registered_savings_plan_” text=”What is a registered savings plan?” font_container=”tag:h3|text_align:left” css=””][vc_column_text css=”” el_class=”checkmarks”]<\/p>\n

As the name implies, a registered savings plan is a savings plan that is “registered” with the Canada Revenue Agency (CRA<\/a>) because of certain tax rules. However, not all “registered savings plans” are related to financial planning for retirement. The best-known are:<\/p>\n