- are plans that individuals use to set aside money to be used in retirement
- Income tax is not paid on any money in the retirement account until the money is withdrawn
- All withdrawals are added to your taxable income the year after they've been withdrawn
- Interest is not taxable when it accrues on the retirement income in the registered plan
- over contributions are allowed in the amount of $2000 without incurring penalties
- You can make contributions until age 69 for you and age 69 for your spouse
- You can make spousal contributions, beneficial if spouse in lower tax bracket when funds withdrawn
- To have funds added to spouse's income must not have a made a spousal contribution in the last three years or the attribution rules will apply
- Funds are usually withdrawn from the registered plan at retirement when your income is much lower
- Because funds are withdrawn when your income is lower the amount of tax payable on the retirement income is usually lower
RESP - Registered Education Savings Plans
- These are tax sheltered investment plans used to accumulate funds to finance children's post secondary education
- Interest earned on these investments grow tax free until the funds are withdrawn
- The student receives the principal amounts and claims the income on their taxes which usually results in very little income tax being paid on these funds because students are usually in much lower tax brackets when going to school.
- Parents, grandparents, anyone who wants to assist children in pursuing education can set up one of these plans
- The federal government will make contributions in the form of grants representing 20% on the first $2,000 in annual contributions to a RESP for children under 18. These payments are known as the Canada Education Savings Grants.
- Maximum payments can be made to these plans in the amount of $4,000 per year
RRIF - Registered Retirement Income Fund
- The plans assist you in withdrawing your RRSP investment income
- You are required by law to convert your RRSP into a qualified form of retirement income once you reach age 69
- You may set up a plan where you withdraw regular amounts of income over several years
- All withdrawals are added to your taxable income for that year and you may be required to pay income tax on the withdrawal amounts.
- There are minimum amounts that must be withdrawn from a RRIF every year.
- You can base the age on your spouse's age if they are younger than you to decrease the minimum withdrawal amounts
- Plans are flexible in the sense that you determine the amounts to withdraw as long as you meet the minimums
- You can decide how often you'd like to receive the payments, monthly, semi annually, annually
- You can make changes to the amount you receive and the payment schedule at any time of the year
- The RRIF can be closed entirely and you would pay the appropriate tax on the amount of money you received
