Registered retirement savings plan

[2] Qualified investments[3] include savings accounts, guaranteed investment certificates (GICs), bonds, mortgage loans, mutual funds, income trusts, common and preferred shares listed on a designated stock exchange, exchange-traded funds, call and put options listed on a designated stock exchange, foreign currency, and labour-sponsored funds.

Rules determine the maximum contributions, the timing of contributions, the assets allowed, and the eventual conversion to a registered retirement income fund (RRIF), or an annuity, or the withdrawal of all funds within the RRSP, at age 71.

[5] The holder of the RRSP (the "annuitant") can defer the deduction due to the contribution to a later year.

[9] RRSP accounts can be set up with either one or two associated individuals: There are a few benefit factors that add to a total.

There is a possible bonus (or penalty) from withdrawal tax rates lower (or higher) than at contribution.

Example: Taxpayer has a 30% combined federal-provincial marginal income tax rate and makes a $10,000 contribution to a registered account.

It is clear from the example, above, that so long as the taxpayer's marginal income tax rate does not change, the TFSA and RRSP produce the same results.

Since 1991, contribution limits are calculated at 18% of the prior year's reported earned income (from employment or self-employment), up to a maximum.

While it is possible to contribute more than the contributor's deduction limit, it is generally not advised as any amount $2,000 over the deduction limit is subject to a significant penalty tax removing all benefits (1% per month on the overage amount).

Prior to 1991, contribution limits were calculated at 20% of the prior year's reported earned income, up to a maximum of $7,500 for taxfilers without an employer-sponsored registered pension plan, or $3,500 for taxfilers who had an employer-sponsored registered pension plan.

Before the end of the year the account holder turns 71, the RRSP must either be cashed out or transferred to a Registered Retirement Income Fund (RRIF) or an annuity.

On death the assets remaining in the account are withdrawn and distributed directly to the named beneficiary.

Like other withdrawals, the value of the assets is included in the taxable income of the account's owner.

The liability to pay the tax lies with the estate, no matter who received the account's assets.

There are also provisions for the tax-free transfer of assets to minor children, grandchildren and dependents.

This program allows individuals to borrow from an RRSP to go or return to post-secondary school.

Each time that an individual uses RRSP contribution money to purchase an investment at a different fund company, it results in a separate client-held account being opened.

The main benefits of client-name accounts is that they do not generally incur annual fees or "exit fees", the investment is registered with the trustee in the client's name instead of the "dealer's" name and therefore, client-name investments are not subject to bankruptcy issues if the dealer goes bankrupt.

Generally, client-held accounts are for mutual funds and exempt products only; therefore, if an investor holds stocks and bonds along with mutual funds or exempt products, a Nominee or Intermediary account is most beneficial for ease of tracking all types of investments in one place.

It is possible to have an RRSP roll over to an adult dependent survivor, child or grandchild, as it would to a spouse.

This was made possible in 2003 and there are various Income Tax Act (ITA) requirements to allow this to take place.

Acquiring this asset may also affect the adult dependent child's eligibility for provincial assistance programs.

It has the added benefit that RRSP assets dedicated to the LBT could be protected from creditors.

Non-Canadian content was limited to 10% of the plan's assets, originally measured by market value, and in 1971 changed to 10% of book value.

They typically did this by holding all fund assets in Canadian treasury bills or similar cash equivalent assets, and using foreign equity index futures or forward contracts with a similar notional value to obtain equivalent market exposure.