RSP vs RRSP: Are They the Same Thing? What the Label Means, and Why It Matters on a US Return

Canadian financial institutions label retirement accounts inconsistently: "RSP," "RRSP," "Retirement Savings Plan," "Group RSP," "Spousal RSP," "Locked-in RSP." In most cases "RSP" is shorthand for an RRSP, a plan registered under the Income Tax Act with the contribution, deduction, and deferral rules that follow. Occasionally it is not: a "retirement savings plan" marketed by a bank or insurer can be a non-registered savings product, and the tax treatment is entirely different. For a Canadian resident the distinction shows up on the T1; for a cross-border filer it decides whether the treaty deferral applies, whether the account is a PFIC problem, and how the US return reports it.

Key takeaways

• RRSP: a Registered Retirement Savings Plan registered with the CRA under section 146. Contributions are deductible within limits, growth is untaxed inside the plan, withdrawals are fully taxable. The plan issuer issues contribution receipts and, on withdrawal, a T4RSP (or NR4 for a non-resident).
• RSP: usually a marketing abbreviation for an RRSP. Confirm by checking for a contribution receipt showing the plan's registration, a T4RSP on withdrawal, or the words "registered" in the account agreement.
• Group RSP: an employer-sponsored group RRSP: individual RRSPs administered together, with payroll contributions. Registered; treated as an RRSP.
• Locked-in RSP / LIRA / LRSP: an RRSP holding transferred pension money subject to pension legislation lock-in rules. Registered; treated as an RRSP for tax and treaty purposes.
• Non-registered "savings plan": a taxable investment or savings account with a retirement label. No deduction, no deferral, taxable annually. For a US person, its holdings are subject to the PFIC rules if they are Canadian funds.
• Why it matters cross-border: the treaty's Article XVIII deferral and Revenue Procedure 2014-55 apply to plans registered as RRSPs and RRIFs (and, by extension, LIRAs and similar registered plans); a non-registered account gets no deferral and its Canadian mutual funds are PFICs.

How to tell

Look for: a contribution receipt (issued for RRSP contributions, showing the plan number and the words "RRSP" or "registered"); a T4RSP on any withdrawal; a "pension adjustment" or deduction limit statement from the CRA reflecting the plan; the account agreement's description ("Retirement Savings Plan registered under the Income Tax Act (Canada)"). A non-registered account issues T5 or T3 slips for income and T5008 for dispositions, and no contribution receipt.

Bank product names: "RSP GIC" is a GIC held inside an RRSP; "RSP Savings Account" is usually an RRSP with a savings-account investment; "Retirement Savings Plan" from an insurer may be a registered or non-registered segregated fund product, and the contract says which.

The registered family

• RRSP: the individual plan.
• Spousal RRSP: an RRSP in the spouse's name with contributions by the other spouse; registered; the annuitant spouse owns it.
• Group RRSP: individual RRSPs under an employer's group arrangement; registered.
• LIRA / locked-in RSP / LRSP / RLSP: RRSPs holding transferred pension funds, locked in under provincial or federal pension law; registered.
• RRIF, LIF, LRIF, PRIF: the payout counterparts; registered.
• PRPP (pooled registered pension plan): a registered plan with similar treatment.
• DPSP (deferred profit sharing plan): an employer plan; registered; different contribution rules; treated as a pension for treaty purposes.
• RPP (registered pension plan): an employer pension; registered under a different section; treaty pension.

All of these are registered plans with tax-deferred growth in Canada, and all are covered by the treaty's pension provisions for US purposes.

Why the US return cares

Registered. An RRSP, RRIF, LIRA, LIF, or similar registered plan held by a US person is covered by Article XVIII(7) and the automatic deferral under Revenue Procedure 2014-55: the plan's growth is not reported on the 1040 until withdrawal; Canadian mutual funds inside it are not subject to PFIC reporting; the plan is reported on the FBAR and Form 8938 only. Withdrawals are pension income with basis recovery and a foreign tax credit.

Non-registered. A taxable account labelled "savings plan" has no deferral: interest, dividends, and gains are reported on the 1040 annually; Canadian mutual funds and Canadian-listed ETFs in it are PFICs, each requiring Form 8621; the account is on the FBAR and Form 8938. A US person who believed a non-registered "RSP" was an RRSP and omitted its income has an amended-return problem.

Group and locked-in plans. Treated as RRSPs; the same deferral; the same reporting. A LIRA's lock-in affects when it can be withdrawn (unlockable in full after two years of non-residence in most provinces), not its tax treatment.

Worked example

A US citizen in Calgary has three accounts labelled by his bank as "RSP": an "RSP" with $150,000 of Canadian equity funds, a "Group RSP" through his employer with $80,000, and an "RSP Savings" account with $20,000 in a high-interest savings product.

• "RSP". Contribution receipts and a CRA deduction limit statement confirm it is an RRSP. Registered; treaty deferral; the equity funds are not PFICs; FBAR and Form 8938 only.
• "Group RSP". The employer's plan documents confirm group RRSP registration. Same treatment.
• "RSP Savings". No contribution receipts; T5 slips for interest. On inquiry, a non-registered savings account the bank markets as a retirement savings product. No deferral; interest reported on the 1040 annually; FBAR and Form 8938. No PFIC (it holds no funds).
• Correction. Two years of T5 interest omitted from the 1040 on the belief that the account was registered; amended returns with the interest and the foreign tax credit.

Official sources

"Deductible RRSP contributions can be used to reduce your tax." "Any income you earn in the RRSP is usually exempt from tax as long as the funds remain in the plan." — Canada Revenue Agency, Registered Retirement Savings Plan (RRSP), https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/registered-retirement-savings-plan-rrsp.html

"Eligible individuals" are "treated as having made the election" in the first year in which the individual would have been entitled to elect the benefits under Article XVIII(7) with respect to the plan, without filing Form 8891. — Internal Revenue Service, Revenue Procedure 2014-55, https://www.irs.gov/pub/irs-drop/rp-14-55.pdf

Practitioner note

The label on the statement is not the registration. We ask for the contribution receipts and the CRA's deduction limit statement before we treat any 'RSP' as an RRSP on a US return, because the treaty deferral and the PFIC rules both turn on the answer, and a non-registered account dressed as a retirement plan is one of the more common amended-return causes we see.

See also: Planning a move? Start with the Canada-to-US tax checklist and browse every corridor by city, province, and state.

Next step

Fairlight prepares confirmation of each account's registration status, the treaty deferral position, and the annual FBAR, Form 8938, and PFIC reporting where applicable. See cross-border pricing or book a call.