Account types

Fidelity offers a broad range of savings and retirement income options to help investors meet their goals at all life stages:

Registered Retirement Savings Plan (RRSP)

Designed to help Canadians save for retirement. There are two key benefits:
  1. Contributions can be deducted from income to reduce taxes.
  2. Tax on investment income earned inside an RRSP is deferred until it is withdrawn, allowing earnings to grow faster than they would in a non-registered account.
Withdrawals from an RRSP are taxable and are treated as ordinary income.

An RRSP can contain a variety of different investments, including stocks, bonds, mutual funds, GICs, contracts and mortgage-backed equity.

Tax-Free Savings Account (TFSA)

Useful for saving for both short- and long-term savings goals. Like RRSPs, investment income such as interest, dividends and capital gains, is not taxed when earned in a TFSA. Unlike RRSPs, contributions are not tax deductible, but funds can be withdrawn tax free. Any unused room can be carried forward and withdrawals can be returned at a later date.

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Locked-in Retirement Account (LIRA) or Locked-in Retirement Savings Plan (LRSP)

A special retirement savings account that holds the commuted funds of a registered pension plan when an employee leaves a company. Like an RRSP, a wide variety of investments are allowed in a LIRA/LRSP and the earnings are tax-deferred. Unlike an RRSP, no further money can be transferred into a LIRA/LRSP once it is set up, and usually money, including earnings in the account, cannot be withdrawn until the account is matured. The maturity options vary by province.
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Registered Education Savings Plan (RESP)

Designed to help save for a child’s post-secondary education. Contributions are not tax deductible, but earnings accumulate tax-free while in the account. Under the Canada Education Savings Grant (CESG), the government also contributes a certain amount to plans for children under 18. Once enrolled for post-secondary education, the subscriber begins to withdraw the funds. The portion of the withdrawal which is a return of the original contribution is received tax free. The portion of the withdrawal that is accumulated income (which includes the grant) is included in the child’s income and taxed at his or her marginal rate -- which usually means there is little or no tax to pay. 

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Non-registered account

A regular investment account, that can be used for any savings goal. Investments are bought with after-tax dollars and taxes are payable on interest, dividends and capital gains.
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Registered Retirement Income Fund (RRIF)

Provides income during retirement from savings built up in an RRSP. (RRSPs must be matured and rolled over by the time the holder reaches age 71). Like an RRSP, the earnings in the RRIF are tax-sheltered. But the holder must withdraw a minimum amount every year, the withdrawal is treated as ordinary income an subject to tax.
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Life Income Fund (LIF)

Provides retirement income. Money from a LIRA/LRSP can be transferred into a LIF so that investments can continue to grow tax-deferred until withdrawn. Each year, a minimum amount must be withdrawn and taxed at the investor’s marginal rate. In addition, there is a maximum annual withdrawal amount. In some provinces, a LIF must be converted to an annuity when the investor reaches 80.

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Locked-in Retirement Income Fund (LRIF)

Like a LIF, provides income during retirement, but with no requirement to convert the fund to an annuity. Also, withdrawal limits are calculated differently.
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