Terms & Definitions
In an ever changing landscape of acronyms and terminology, let’s take some time to get on the same page.
An RRSP is a retirement savings plan that you establish, that we register, and to which you or your spouse or common-law partner contribute. Deductible RRSP contributions can be used to reduce your tax. Any income you earn in the RRSP is usually exempt from tax as long as the funds remain in the plan; you generally have to pay tax when you receive payments from the plan.
A registered retirement income fund (RRIF) is an arrangement between you and a carrier (an insurance company, a trust company or a bank) that we register. You transfer property to the carrier from an RRSP, a PRPP, an RPP, an SPP, or from another RRIF, and the carrier makes payments to you. The minimum amount must be paid to you in the year following the year the RRIF is entered into. Earnings in a RRIF are tax-free and amounts paid out of a RRIF are taxable on receipt.
The Tax-Free Savings Account (TFSA) is a way for individuals who are 18 and older and who have a valid social insurance number to set money aside tax-free throughout their lifetime.
A registered education savings plan (RESP) is a contract between an individual (the subscriber) and a person or organization (the promoter). Under the contract, the subscriber names one or more beneficiaries (the future student(s)) and agrees to make contributions for them, and the promoter agrees to pay educational assistance payments (EAPs) to the beneficiaries.
A Locked-in Retirement Account are registered accounts that are funded with assets from a pension plan. These types of accounts are very similar to the RRSP but with some significant restrictions.
LIF / LRIF / RLIF
In many ways a LIF / LRIF / RLIF / PRIF works like a LIRA or locked-in RRSP in reverse: Instead of putting money in, you take an income out.
A Registered Disability Savings Plan (RDSP) is a savings plan that is intended to help parents and others save for the long term financial security of a person who is eligible for the Disability Tax Credit (DTC).
Canadian Pension Plan
Exchange Traded Fund
Guaranteed Income Certificate