RSP vs. RRSP: A product comparison guide

The main difference between a Registered Savings Plan (RSP) vs a Registered Retirement Savings Plan (RRSP) account is that while both accounts can be used for saving for retirement, an RRSP provides account holders to contribute up to 18% of a previous year’s earned income ($32,490 maximum for 2025) in a tax-free account that can be shared between a spouse or common law partner.

You might have a Registered Pension Plan at your employer, and that too could be part of your retirement planning. So, when you see RSP, or ‘retirement savings plan’, it could refer to any number of accounts related to retirement planning.

We’ve already talked about the difference between ‘registered savings plans’ and ‘retirement savings plans’, and some people may call one or both ‘RSPs’. But perhaps even more common is the confusion between RSP and RRSP.

RSP and RRSP are two acronyms used interchangeably by pretty much everyone. Generally, people will use either term to refer to an RRSP account. But remember, while an RRSP is a type of RSP, an RSP is not always an RRSP. It’s like an apple being a type of fruit, but not all fruits are apples.

When it comes to investing, the three most popular account types are the RRSP, the TFSA, and the non-registered account (non-registered accounts also known as cash or margin accounts). This article will provide some basics on the RRSP, but you can learn more about TFSAs and non-registered accounts in the learning centre.

What is a Registered Savings Plan?

What is a Retirement Savings Plan (RSP) account?

What is an RRSP account? (Registered Retirement Savings Plan)

The Registered Retirement Savings Plan (RRSP) is one of the most well-known ways for individuals to save and invest for their retirement and was created by the federal government in 1957. They became very popular because of the unique tax benefits. Let’s break down the major features of an RRSP.

RRSP withdrawals are treated like income

While you get to deduct RRSP contributions from your income in the years you claim contributions, RRSP withdrawals are treated like income when you take them out of the plan. This can be advantageous when your marginal tax rate during your contributing years is higher than your marginal tax rate during your withdrawal years. For example, let’s say you make a $10,000 withdrawal and your marginal tax rate was 25%. This would result in $2,500 in income tax. The bigger the tax bracket difference between these two stages of life is (the contributing phase versus the withdrawal phase), the more attractive RRSPs will be for your retirement planning. You can learn more about RRSP withdrawals here.