What Is RSP?

What Is RSP
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If you’re a savvy investor or planning for your financial future, you might have come across the term RSP. But what exactly is RSP? In this article, we’ll demystify the concept of RSP and provide you with all the essential information you need to know. Whether you’re a beginner or looking to enhance your knowledge, join us as we explore the ins and outs of RSPs and how they can help you achieve your financial goals.

What is RSP?

RSP stands for Registered Retirement Savings Plan, a tax-advantaged investment account available to Canadian residents. It is designed to encourage individuals to save for their retirement by offering attractive tax benefits. When you contribute to an RSP, your contributions are tax-deductible, meaning they reduce your taxable income. This reduces the amount of income tax you owe for the year. Additionally, any investment growth within the RSP is tax-deferred until you withdraw the funds during your retirement when your income and tax rate may be lower.

Contributions and Limits

One of the key aspects of RSPs is the contribution limit. The maximum amount you can contribute to your RSP is determined by your annual income and is subject to certain rules. For the 2023 tax year, the contribution limit is 18% of your earned income up to a maximum of $30,780, which is adjusted annually. It’s important to note that unused contribution room can be carried forward, allowing you to catch up on contributions in future years.

Tax Benefits and Considerations

One of the primary advantages of RSPs is the tax benefits they offer. As mentioned earlier, your contributions to an RSP are tax-deductible, meaning they can lower your taxable income. This can result in a significant reduction in your annual tax bill. Furthermore, the investment growth within the RSP is tax-sheltered, allowing your investments to grow more efficiently over time. However, it’s essential to remember that when you withdraw funds from your RSP during retirement, those withdrawals are subject to taxation at your marginal tax rate.

Investment Options and Flexibility

RSPs offer a wide range of investment options, allowing you to tailor your portfolio to your financial goals and risk tolerance. These options may include stocks, bonds, mutual funds, exchange-traded funds (ETFs), and more. It’s important to consider your investment strategy carefully and seek professional advice if needed to make informed decisions that align with your long-term objectives.

Withdrawals and Conversion

While RSPs are primarily intended for retirement savings, there are instances when you may need to make withdrawals before you retire. However, these withdrawals are generally subject to taxes and may impact your contribution room. It’s crucial to understand the rules regarding early withdrawals to avoid any potential penalties or tax implications. Additionally, when you reach the age of 71, your RSP must be converted into a Registered Retirement Income Fund (RRIF) or annuity, which provides you with a steady stream of retirement income.


Yes, RSP and RRSP refer to the same thing in Canada. RRSP stands for Registered Retirement Savings Plan, and RSP is just the abbreviated form of the same term.

Since RRSP and RSP are the same thing, there is no difference in their benefits. Both terms refer to the Registered Retirement Savings Plan, which is a tax-advantaged savings vehicle for retirement in Canada.

In Canada, RSP stands for Registered Retirement Savings Plan. It is a personal savings account that allows individuals to contribute and grow their savings for retirement while enjoying tax benefits.

RSP is an acronym that stands for Registered Retirement Savings Plan. It is a financial tool designed to help individuals save and invest for their retirement while enjoying tax advantages.

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Written by:

Jim Pan, CFP, MFA-P

Jim is a dedicated, fee and advice only independent Certified Financial Planner with a focus on supporting healthcare business owners during their crucial growth phase. His expertise lies in offering comprehensive solutions to minimize taxes while embracing a holistic approach. With a career spanning back to 2010, Jim has established a strong presence in the financial industry. He proudly holds a range of designations, including Certified Financial Planner (CFP), and Master Financial Advisor - Philanthropy (MFA-P). He is currently pursuing additional designations and qualifications to better serve his clients and community. Beyond his qualifications, Jim is a member and an esteemed participant in the Million Dollar Round Table (MDRT), an exclusive global association comprising the top 1% of financial advisors. Jim's commitment extends to the community, where he spearheads numerous charitable fundraising events and plays an active role in enhancing the well-being of others. Additionally, he has contributed significantly by serving on the board of the Canadian Mental Health Association in Vancouver. Currently, he volunteers with Junior Achievement of British Columbia (JABC) to present personal finance topics to youths.

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