An RSP is an acronym for Retirement Savings Plan. It can refer to any number of financial products designed to help you save for retirement. An RRSP is a specific type of account with two stand out characteristics. The first — it has tax advantages in that any contributions can be deducted from your income.
Also to know is, how does an RSP work?
When you contribute money into an RSP, the contribution amount becomes deductible (subject to your personal limit) from your income tax. As well, when you withdraw money, it becomes part of your taxable income in the year it is withdrawn.
Contributions are tax-deductible based on your marginal tax rate when you put the money in. So, if you make $100,000 a year, your marginal tax rate is 43.41%. This means if you put $1,000 in an RSP, you‘ll get about $430 “back”.
Additionally, what is a Canada RSP?
A registered retirement savings plan (RRSP), or retirement savings plan (RSP), is a type of financial account in Canada for holding savings and investment assets. RRSPs have various tax advantages compared to investing outside of tax-preferred accounts.