Account name acronyms - Glossary
TFSA
Tax-Free Savings Account: Introduced in 2009 for Canadian residents. Contributions grow tax-free, and withdrawals are not taxed. The 2025 annual limit is $7,000.
RRSP
Registered Retirement Savings Plan: A tax-deferred retirement account. Contributions reduce taxable income, and withdrawals are taxed as income—ideally at a lower rate in retirement. Individuals can open personal RRSPs, or participate in employer-sponsored group RRSPs with possible company matching. Funds can be transferred between group and individual RRSPs. The RRSP must be closed by December 31 of the year the holder turns 71. At this point, no more contributions are allowed. Typically, it is converted to a RRIF, but other options exist.
DCPP/LIRA
Defined Contribution Pension Plan: Employer-sponsored plan with fixed contribution percentages. Contributions are tax-deferred and reduce RRSP contribution room. When employment ends, the plan becomes a Locked-In Retirement Account (LIRA). No further contributions are allowed. Withdrawal rules vary by province. Similar to RRSP's, LIRAs must convert to a LIF by age 71.
RRIF/LIF
Registered Retirement Income Fund and Life Income Fund: These accounts receive funds from RRSPs and LIRAs, respectively, for retirement withdrawals. Set minimum annual withdrawals increase with age, designed to deplete the retirement funds as the retiree ages. LIFs also have a maximum withdrawal limit. Withdrawals are taxable pension income. Conversion from RRSP/LIRA is required by the end of the year the account holder tuns 71. Withdrawals must begin in the year the retiree turns 72, however if they have a younger spouse, the minimum % required to be withdrawn can be based on their age.
FHSA
First Home Savings Account: A registered plan for first-time homebuyers. Contributions are tax-deductible like an RRSP, and withdrawals (if used for a qualifying home) are tax-free like a TFSA.
RESP
Registered Education Savings Plans (RESP) are accounts used to save for a child's post-secondary education. Key features include:
The Government of Canada provides a 20% grant (CESG) on contributions, up to $500 per year, with a lifetime maximum of $7,200 per child.
Low-income families may qualify for the Canada Learning Bond (CLB).
Withdrawals are categorized into two types:
Post-Secondary Education (PSE) payments: Withdrawals from original contributions. These are tax-free.
Education Assistance Payments (EAP): Withdrawals from government grants and investment income. These are taxed at the student's income tax rate, which is typically lower than the contributor's/parent's.
Additional notes:
There is a limit on how much EAP can be withdrawn in the first semester of studies.
Unused EAPs (up to $50,000) can be transferred to the contributor’s RRSP if contribution room is available.
RESP accounts can remain open for up to 36 years, or 40 years for a beneficiary with a disability.
What information do I need to gather for planning my retirement (Retirement Calculator)?
Annual Expenses
Estimate current and future expenses—e.g., less childcare or mortgage, more travel or dining.
Length of your retirement
Define when withdrawals will start and end.
Inflation & Investment Returns
These significantly affect projections. Use FP Canada's Assumption Guidelines for standardized inputs.
FP Canada Projection Assumption Guidelines
.
Expected pension benefits
This includes Canada Pension Plan, Old Age Security, workplace pensions or other expected sources of income such as a rental property or a foreign pension.
Current Account balances
Used as a starting point. No future contributions are assumed. Data is not stored by myfincal.com.
Non-Registered Taxable % on Withdrawal
To simplify, a flat tax rate is applied. Example: $100 grows to $150 → $50 gain → 50% of gain ($25) is taxable → $25/$150 = 17% taxable portion.
Target tax bracket
Used to limit RRIF withdrawals or other taxable income sources before drawing from other non-taxable sources of income.
Withdrawal Priority Order
The retirement accounts have different tax implications. By changing the priority order of accounts and the Target tax bracket, a user can see how their withdrawal strategy will help or hinder their retirement finances.
Retirement Calculator Results
The results from the Retirement Calculator display the inflation-adjusted withdrawals required from each account, to help visualize cash flow or organize a retirement bucket strategy.
Mortgage Calculator
Term remaining
Refers to the current mortgage term (e.g., 1-5 years), not the full amortization period.
Fixed Rate
Payments remain constant during the term, ie Fixed Payment. The principal-to-interest ratio shifts over time. New terms may have different rates and payments.
Variable Rate
Variable rate mortgages can come with fixed payments or a fixed principal portion. With fixed payments, the total payment will not change. As the interest rates fluctuate, the principal to interest ratio will change. If less principal is being paid (higher interest) the amortization period will lengthen to make up for the lower principal being paid.
Fixed Payment: Total payment (interest + principal) stays the same; interest/principal ratio varies. Higher interest = less principal = longer amortization.
Fixed Principal: Interest varies, so total payments fluctuate, but amortization stays on track.
CPP Calculator
Estimated benefit amount
Based on user-entered earnings history. CPP now includes:
Base CPP: Replaces up to 25% of average earnings up to the Year's Maximum Pensionable Earnings (YMPE).
First Additional CPP: (2019-2023) Transition period to increase contributions to start covering 33% of average earnings up to YMPE. Canadians working after 2019 will have made increased contributions so that they can have increased benefits.
2nd Additional CPP: (2024+) A higher earnings band, called the YAMPE (Year's Additional Maximum Pensionable Earnings) is introduced. This benefit adds 33.33% replacement on earnings between YMPE and YAMPE.
Child rearing provision
Years of lower income that coincide with child rearing years can be excluded from the CPP benefit calculation to increase the amount of the benefit.
Access your CPP Statement of Contributions via your My Service Canada account.
When to start CPP benefits?
Upon calculating the estimated benefits, a chart with the estimated cumulative CPP benefit over time is displayed. Use this with your longevity and income needs to decide the optimal start time.
Return on Investment Calculator
Compare across Canadian account types
This calculator assumes the contributed amount and its gain is withdrawn at the end of the Time Horizon. The final return of the investment is the post-tax return. For the RRSP, the marginal tax rate savings upon contribution are not assumed to be re-invested, but they do reduce the cost of the investment.