RRSP: vehicle available to individuals to defer tax on a specified amount of money to be used for retirement. The holder invests money in one or more of a variety of investment vehicles which are held in trust under the plan. Income tax is deferred until the money (the amount originally deposited plus any interest or dividends made on that money) is withdrawn at retirement. RRSPs can be converted into Registered Retirement Income Funds.
RRIF’s: An arrangement under which the owner must withdraw each year a minimum amount prescribed by the Income Tax Act (Canada). Funds usually originated from matured RRSPs or transfers from other registered plans.
Annuities: An annuity is the payment of a regular income by a life company to an annuitant in exchange for a lump sum either for life or shorter periods. Annuities are typically used for retirement pensions and the individual receiving the annuity is known as an annuitant. Annuities can broadly be classified into two types: (A) Compulsory purchase annuity which is bought from the proceeds of a pension fund and is taxable as earned income (B) A purchased life annuity which is bought with an individual's own capital and is taxed at a lower rate than a compulsory purchase annuity.
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