What is a key characteristic of a Registered Retirement Savings Plan (RRSP)?

A key characteristic of a Registered Retirement Savings Plan (RRSP) is that it allows for tax-deferred growth, meaning the funds within the plan can grow without being taxed until they are withdrawn. This characteristic is in line with the option that states it "grows tax-free indefinitely," which accurately captures one of the fundamental benefits of an RRSP.

With regard to the nature of withdrawals, while there are indeed restrictions around the withdrawal of funds before retirement age, particularly concerning tax implications, once withdrawn, you would typically have the ability to recontribute those amounts within your contribution limits. The other options incorrectly portray aspects of an RRSP, such as suggesting that contributions are not tax-deductible or that withdrawals are completely restricted until age 65. Therefore, the description of tax-free growth is crucial to understanding how RRSPs function and underscores their purpose as a retirement savings tool.