Registered Accounts
A registered account is an investment account that is given tax-deferred or tax-sheltered status by the government. Once a registered account is opened, you can invest within them into asset classes such as private equity, public equity (stocks and mutual funds), GICs and, precious metals.
RRSP
A Registered Retirement Savings Plan (RRSP) is a retirement savings plan that you are able to make contributions to reduce your annual income thus reducing taxes for that year. Any income you earn in the RRSP is exempt from tax as long as the funds remain in the plan and you pay taxes when you withdraw. Typically contributions are made in higher income earning years and withdrawals are made in retirement when your income is reduced.
RESP
A Registered Education Savings Plan is a special savings account for parents who want to save for their child's education after high school.
Canada Learning Bond
Employment and Social Development Canada (ESDC) provides an additional incentive of up to $2,000 to help low-income families start saving early for their child's education after high school (post-secondary education). The Canada Learning Bond (CLB) money will be deposited directly into the child's RESP.
The CLB is available for eligible children from low-income families born in 2004 or later and provides an initial payment of $500 for the first year the child is eligible, plus $100 for each additional year of eligibility, up to age 15, for a maximum of $2,000. Personal contributions are not required to receive the CLB. To help cover the cost of opening an RESP, ESDC will pay $25 into the RESP to which the initial CLB of $500 is deposited in recognition of a one-time incidental expense that may be associated with opening the RESP account.
RDSP
A Registered Disability Savings Plan is a savings plan intended to help parents and others save for the long-term financial security of a person who is eligible for the disability tax credit (DTC).
Contributions to an RDSP are not tax deductible and can be made until the end of the year in which the beneficiary turns 59. Contributions that are withdrawn are not included as income to the beneficiary when they are paid out of an RDSP. However, the Canada disability savings grant (grant), the Canada disability savings bond (bond), investment income earned in the plan, and the proceeds from rollovers are included in the beneficiary's income for tax purposes when they are paid out of the RDSP.
TFSA
The Tax-Free Savings Account program began in 2009. It is a way for individuals who are 18 and older and who have a valid social insurance number (SIN) to set money aside tax-free throughout their lifetime. Contributions to a TFSA are not deductible for income tax purposes. Any amount contributed as well as any income earned in the account (for example, investment income and capital gains) is generally tax-free, even when it is withdrawn. Administrative or other fees in relation to TFSA and any interest or money borrowed to contribute to a TFSA are not tax deductible.
The TFSA contribution limit for 2022 is $6,000. If you were born before 1991, you can deposit a total of $81,500. Those born after 1991 will have a smaller total contribution limit. Unused TFSA contribution room rolls over from one year into the following year.
No matter what type of account you are looking for, Middle Retirement will educate you about your options and help find the best investment for you.