Savings PlansPlan for your children or yourself
With the right Savings Plan, you can be prepared for your children’s post-secondary education and/or your retirement.
RRSP (Registered Retirement Savings Plan): A plan registered with Canada Revenue Agency under section 146 of the Income Tax Act. Within prescribed limits, contributions from earned income are deductible for taxation purposes and the growth inside the plan is tax-sheltered – a dual advantage of great significance in encouraging retirement savings. The plan must mature no later than the end of the year in which the owner attains age 69. Proceeds are taxable, but when taken as retirement income – when the owner’s tax bracket is (hopefully) lower than during the earning years – the income tax impact is lessened.
RESP (Registered Education Savings Plan): A savings plan sponsored by the Canadian government which encourages investing in a child’s future post-secondary education. Subscribers to an RESP make contributions that build up tax-free earnings – tax-free because subscribers cannot deduct payments made to the plan from their income. The government contributes a certain amount to plans for children under 18 under the Canadian Education Savings Grant (CESG).