RRSP: Registered Retirement Savings Plan

RRSP: Registered Retirement Savings Plan is a Canadian Governments Program for retirement saving

RRSP: Registered Retirement Savings Plan is deduction for your tax planning

This Retirement Savings Plan or RSP is an account that provides tax benefits for saving for retirement in Canada.

RSP in the Income Tax Act allows a person to shelter financial property from income taxes.

RSPs help you reduce taxes: Contributions to RSP, up to limits described below, may be deducted from income before calculating income tax

A deduction limit is calculated as 18% of a person's earned income from the previous tax year, minus any "pension adjustment", up to a specified maximum.

This specified maximum is as shown in the table below:

* 2008 $20,000
* 2009 $21,000
* 2010 $22,000

After 2010 the RSP contribution limit will be indexed to the annual increase in the average wage.

A person with a marginal tax bracket of 40%, means that in an investment of $1000 in RSP, they would receive $400 back from your withholding taxes

Any RSP deductions not taken in a tax year are carried forward indefinitely to future tax years.

Every year, tax payer receives a Notice of (Re)Assessment from the Canada Revenue Agency, indicating their new RSP deduction limit.

Income earned in RSP (interest, corporate dividends, trust distributions, capital gains) is not taxed until money is withdrawn from the registered plan

Money may be withdrawn from an RSP in tax years when one is unemployed or when one is ready to retirement at age 69, it must be either cashed out or matured into a RRIF: Registered Retirement Income Fund

RSP accounts popularly promoted are: savings accounts, GIC: guaranteed investment certificates, stocks, bonds, and mutual funds

Gaining popularity is the Canadian Home Buyers Plan where Canadians can borrow, up to $20,000, tax-free from their RRSP "and another $20,000 from a spousal RSP" making a total of $40,000 towards buying their first residence.

This loan has to be repaid within 15 years after two years of grace.

RRSP or Registered Retirement Savings Plan is a good tax deduction program