REGISTERED RETIREMENT SAVINGS PLAN (RRSP)
Registered Retirement Savings Plan is a government approved plan through which you save money for your retirement years. Your contributions, within specified limits, are tax deductible, and the interest is tax sheltered. You can have many number of plans.
- Funds are not locked in for any specific term.
- Daily interest, paid semi-annually.
- Rates fluctuate with the market.
- Used until member wishes to lock in a rate through a fixed rate term deposit.
Fixed Rate Term
- Higher yielding term, rate fixed until maturity.
- Interest paid annually.
- Minimum deposit $500.
- Choice of terms from 6 months to 5 years.
- Pays higher interest than the Variable Rate Option.
Index-Linked Term Deposits
- 3 or 5 year deposits.
- The rate of return is tied to the performance of the Toronto Stock Exchange.
- 3 and 5 year maturities.
- The final rate of return is not known until maturity.
- The principal (original deposit) is guaranteed until maturity and cannot go down in value.
- An ideal investment for individuals that want to benefit from the return of the stock market but who do not want to risk losing their original investment.
REGISTERED RETIREMENT INCOME FUNDS (RRIF)
A RRIF can be regarded as a continuation of a RRSP only instead of money going into the plan, funds are paid out of the plan each year. The interest earned in a RRIF remains tax sheltered until funds are disbursed from the plan. RRSP money has to be converted into a RRIF or another similar retirement vehicle by the end of the year that the annuitant turns age 71.
In the year in which the member turns 72 the RRIF must pay out a minimum amount based on a pre set formula. Yearly payments are designed to allow the RRIF to continue paying until the annuitant is well into their 90's. There is no maximum level in any year's payout, therefore larger withdrawals can be made if required. Withdrawals are regarded as taxable income in the year they are received.
Investments within a RRIF are the same as the Variable Rate Plan and the Fixed Rate Terms that are described under RRSP. Index-Linked are not offered within this product.