Non-Registered Savings Plan: Everything You Need To Know

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Are you thinking of contributing to a non-registered savings plan (NRSP) and not sure what it is? This post is for you.

We’ll cover what they are, their features, how they are different from registered accounts and some alternatives.

If you’re ready, let’s start…

Everything You Need To Know about Non-Registered Savings Plan including features and alternatives

What is Non-registered Savings Plan?

A Non-registered Savings Plan is a type of plan that allows its members to save and invest for a variety of financial goals without the tax-advantages of registered accounts like RRSP or TFSA.

They are usually administered by Group Retirement Savings Plan Providers. Several group retirement plan providers like Manulife, Great West Life, iA Financial group and so on, have a NRSP offering.

In other words, a non-registered savings plan is simply a non-registered account offered by group retirement plan providers.

Some reasons why you may want to invest in a non-registered savings plan include:

  • You have maximized your available TFSA and RRSP room, but still want to contribute more
  • Augment your retirement savings or save for other goals

Key Features of Non-registered Savings Plans

  • No contribution limits: Contribute as much or as little as you like
  • Flexible Withdrawals: Since they are not regulated like registered accounts, you can withdraw from the plans anytime you want. Though there could be some restrictions depending on the investment type you hold in the plan.
  • Easy setup: They can usually be setup easily as payroll deductions along with your other contributions to your group retirement plan.
  • Variety of financial goals: Can be used for different goals including shorter term goals like vacation, down payments or longer-term goals like retirement.

Non-registered Savings Plans vs Registered Plan Accounts

There are some key differences between registered and non-registered plans. The table below provides an overview of how NRSPs differ from RRSPs and TFSAs:

Contribution LimitsNoYesYes
Tax DeductionsNoYesNo
Tax-sheltered GrowthNoYesYes
Taxes on WithdrawalsYesYesNo
Carry forward of unused contributionsN/AYesYes

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Alternatives to Non-registered Savings Plans

If you’re not getting an employer match for your contributions to a NRSP, you may be better off investing any additional money outside of these plans.

This is especially important if the funds are invested in mutual funds with a high management expense ratio (MER).

A few alternatives to a NRSP include:

1. Robo-advisors

With robo-advisors, you get the same hands-off investment management you would get with a NRSP. While NRSPs will let you contribute using payroll deductions, you can mimic the same by setting up pre-authorized deposit to your robo-advisor account.

Two of the best and most popular robo-advisors in Canada are Wealthsimple and Questrade (Questwealth Portfolios). Both of them will let you invest in a portfolio that reflect your risk appetite and investment horizons.

Wealthsimple’s management fees starts at 0.50% for assets below $100,000, but Questwealth starts at 0.25%.

The MERs of the underlying ETFs they invest in will add a few more basis point to the fees, but you can expect an overall lower fee than the one at the group retirement plan providers.

2. Self-directed Brokerage

Another alternative to using a non-registered savings plan is opening a self-directed brokerage account. While this isn’t as hands off as a robo-advisor, it gives you more freedom and flexibility with your investment.

And the great thing is, you can build a low-cost diversified portfolio quickly with ETFs or all-in-one ETF portfolios. In fact, many brokerages will let you buy them commission-free.

For example, you can buy and sell stocks and ETFs for free at Wealthsimple Trade and start investing with as little as $1. Get two free stocks here.

Questrade also lets you buy ETFs for free, but it costs a 1 cents per share to sell (minimum of $4.95 and capped at $9.95). Learn how to get up to $200 in bonus and rebates through Questrade offer code here.

Also, check here for a post about asset allocation ETFs and how they work.

Related Post: Build Diversified Portfolio Fast

Final Thoughts

Non-registered Savings Plans are flexible and may be a smart move if you currently struggle to save. But you may be able to invest for your financial goals outside of a registered account using some other lower cost options.

Related Post: Best Investments For Non-Registered Accounts

Simon is a CPA by day and a Personal Finance Blogger by night. With over a decade experience in financial services, he's passionate about personal finance, investing and helping people take control of their financial life.

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