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What is the meaning of the "Registered" part in "Registered Retirement Savings Plan"? What is an example of an unregistered savings plan?

  • The link does not explain the ques: What is 'Registered' – Victor123 Apr 15 '11 at 15:11
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    It doesn't have a specific definition, IMHO. I think it's an overloaded definition or a brand name. Contributions to an RRSP can be said to be registered with the CRA. That has led to using the antonym non-registered for investments that are in taxable accounts. – fideli Apr 15 '11 at 16:25
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    To the community: Why the downvotes? Not a silly question, IMHO. The OP is asking for the meaning of a specific term within the expanded name for RRSP, not for a simple definition of an RRSP. Wikipedia does fall short on this one, explaining what an RRSP is overall, but without specifically touching on what "registered" means (in this context, and not the "dictionary" definition.) – Chris W. Rea Apr 15 '11 at 18:39
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In a nutshell, the "Registered" part of RRSP means it is a special type of account (special in that it has tax advantages that non-registered accounts don't get) and, more specifically, that the government sanctions and permits it and, furthermore, that administrators working on the government's behalf to administer registered plans must follow the rules that are set out for such plans.

Here's a definitive source: Canada Revenue Agency - Registered Retirement Savings Plan (RRSP).

Quote:

An RRSP is a retirement plan that we* register and that you or your spouse or common-law partner establish and contribute to. Deductible RRSP contributions can be used to reduce your tax.

[emphasis mine]

* The "we" being Canada Revenue Agency.

Tax Free Savings Accounts (TFSA) are another example of a registered plan, even though it doesn't have the word "Registered" in the name. Go figure.

You'll find the TFSA listed under a list of registered plan types at Canada Revenue Agency - Tax - Registered plans administrators, alongside other kinds you probably didn't know existed.

Note that registered plans themselves are not administered by the Canada Revenue Agency: CRA permits banks, brokers, trust companies, insurance companies, etc. to take care of all that, and those who offer registered plans must follow CRA's rules, including informing CRA of the plans that get established.


Finally, a "non-registered" plan (not unregistered) is simply a regular investment or savings account. There's nothing special about it. It's unremarkable. You earn money in one, and you owe tax. No sheltering, no deductions.

  • Thanks. Is it fair to say that in non registered accounts, if you trade stocks, you pay tax only at 50% marginal rate? And you pay it at the time of sale, not on withdrawal? – Victor123 Jan 26 '14 at 19:20
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    If you sell a stock in a non-registered account and realize a capital gain, then yes, you pay the tax for that gain in the same year the sale is made. When you file your tax return, you provide a list of capital gains. The total gains gets multiplied by 50% and added to your taxable income. So yes, in effect, your capital gains are taxed at 50% of your marginal rate. Also: if your investments, whether sold or not, generated any other income (e.g. dividends, interest, or other) then you will also need to include that income on your tax return in the year the income is received. – Chris W. Rea Jan 26 '14 at 21:23
  • If the dividends were reinvested through DRIP, I still need to report it on tax return? Thanks so much for your answer. – Victor123 Jan 26 '14 at 21:28
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    @Kaushik A DRIP doesn't simplify your taxes -- quite the opposite. DRIPs will complicate your taxes: (1) Yes, you still need to report the dividends in the year you receive them, and pay tax on that income even if it was reinvested in more shares and not taken as cash. (2) Every time your DRIP buys more shares for you, it creates another purchase event you need to track so that when you sell your shares you can accurately calculate your Adjusted Cost Base (ACB) in order to determine the exact gain. – Chris W. Rea Jan 26 '14 at 21:43

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