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Registered Education Savings Plans (RESPs) and Registered Retirement Savings Plans (RRSPs) are two important investment vehicles in Canada, each serving distinct financial goals. RESPs are specifically designed to help families save for their children's education expenses. Contributions made to an RESP are not tax-deductible, but the investment grows tax-deferred until withdrawn. One of the key benefits of RESPs is the Canada Education Savings Grant (CESG), where the government matches a portion of contributions made, helping to accelerate savings growth. Withdrawals from RESPs are taxed in the hands of the student, typically at a lower tax rate.

On the other hand, RRSPs are intended to help Canadians save for retirement. Contributions to an RRSP are tax-deductible, providing immediate tax benefits by reducing taxable income. The investments held within an RRSP also grow tax-deferred until withdrawn. RRSP contributions are subject to annual contribution limits based on a percentage of earned income, and unused contribution room can be carried forward. Withdrawals from RRSPs are taxed as income at the individual's marginal tax rate, generally in retirement when the individual's income is lower. Both RESPs and RRSPs are valuable tools for long-term financial planning, offering tax advantages and opportunities for wealth accumulation.

• 01Registered Education Savings Plans (RESPs) and Registered Retirement Savings Plans (RRSPs) are two important investment vehicles in Canada, each serving distinct financial goals. RESPs are specifically designed to help families save for their children's education expenses. Contributions made to an RESP are not tax-deductible, but the investment grows tax-deferred until withdrawn. One of the key benefits of RESPs is the Canada Education Savings Grant (CESG), where the government matches a portion of contributions made, helping to accelerate savings growth. Withdrawals from RESPs are taxed in the hands of the student, typically at a lower tax rate. On the other hand, RRSPs are intended to help Canadians save for retirement. Contributions to an RRSP are tax-deductible, providing immediate tax benefits by reducing taxable income. The investments held within an RRSP also grow tax-deferred until withdrawn. RRSP contributions are subject to annual contribution limits based on a percentage of earned income, and unused contribution room can be carried forward. Withdrawals from RRSPs are taxed as income at the individual's marginal tax rate, generally in retirement when the individual's income is lower. Both RESPs and RRSPs are valuable tools for long-term financial planning, offering tax advantages and opportunities for wealth accumulation.
• 02Contributions to RESPs are not tax-deductible, and withdrawals are taxed in the hands of the student.
• 03Registered Retirement Savings Plans (RRSPs) are designed for retirement savings, offering tax-deductible contributions and tax-deferred growth.
• 04RRSP contributions are subject to annual limits based on earned income, with unused room carry-forward.