Investments – Registered
Tax Free Savings Account (TFSA) – A flexible, registered all-purpose saving vehicle that allows you to earn tax free growth on your investments.
Registered Retirement Saving Plan (RRSP) and Registered Retirement Income Fund (RRIF) – RRSP – A tax sheltered investment vehicle that is registered with the federal government to aid in funding your retirement. These contributions reduce your tax payable and withdrawals are fully taxable. Generally, the amount you can contribute to your RRSP or your spouse’s or common-law partner’s RRSP, for a given tax year without tax implications is determined by your RRSP deduction limit. This is often called contribution room, which is calculated as 18 percent of your previous years earned income to a maximum value each year. Unused contributions are carried forward each year, therefore if you didn’t maximize your RRSPs last year, you can add the unused amount to the current year’s limit.
When an individual turns 71, they have options with respect to their RRSP savings. They can withdraw all of their RRSP savings, which will be fully taxable. They can also transfer them into a RRIF, in which earnings are tax-free and amounts paid out are taxable on receipt. The minimum amount must be paid to you in the year following the year the RRIF is established.
Registered Education Savings Plan (RESP) – A Registered Education Savings Plan, or RESP is a government registered plan that helps you save for you children’s post-secondary education. Savings grow and are tax deferred, contributions may be eligible for government grants.
Locked In Retirement Account (LIRA) / Life Income Fund (LIF) – A LIRA is a Canadian investment account specifically designed to hold locked in pension funds for a former plan member, spouse or common law partner. Funds in a LIRA are generally not accessible until retirement at which point they are transferred to a LIF.
LIF – is a type of locked in account, similar to a RRIF but with certain restrictions. Funds transferred into a LIF originate from a pension benefit under a federally regulated pension plan.