What are you saving for?
RRSPs and TFSAs are 2 types of registered savings plans that let you grow your money tax-free, each with their own advantages.
Compare them to see which one is right for you – or choose both!
RRSP | TFSA |
---|---|
Savings goal: Put aside money tax-free to save for retirement, while also reducing your taxable income in the years you make contributions. | Savings goal: Put aside money tax-free to save up for anything you want. |
Use it to:
|
Use it to:
|
Cannot be used as collateral for a loan. | Can be used as collateral for a loan. |
When should you contribute?
RRSP | TFSA |
---|---|
Deadline: March 3, 2025 | Deadline: December 31 of the current year |
Minimum age: There is no minimum age, but you must have employment or business income to accumulate contribution room | Minimum age: 18 |
Maximum age: 71 (you can contribute until the end of the year in which you turn 71) | Maximum age: None |
How much can you contribute?
RRSP | TFSA |
---|---|
Annual contribution limit: 18% of the income you earned the previous year, up to an annual maximum of $31,560 in 2024, and $32,490 in 2025 If you contribute to an employer-sponsored plan, it will reduce your contribution room. |
Annual contribution limit:
|
Contribution room: Any unused portion of your annual limit, which is cumulative dating back to 1991 | Contribution room: Any unused portion of your annual limit, which is cumulative dating back to 2009.= |
Excess contributions: Cumulative lifetime limit of $2,000 over your available contribution room.= | Excess contributions: Not permitted |
Spousal contributions: Permitted The contributing spouse gets to claim the deduction on their taxable income for the year, even if they’re not the beneficiary. |
Spousal contributions: Not permitted However, you can give money to your spouse, which they can invest in their TFSA, without breaking any attribution rules. |
What happens when you withdraw your money?
RRSP | TFSA |
---|---|
If you’re receiving government benefits or credits, money withdrawn from your RRSP is considered taxable income, so it may reduce your benefits. | If you’re receiving government benefits or credits, withdrawing money from your TFSA will have no impact on your eligibility for income-tested. |
Withdrawals cannot be recontributed. | Any money you withdraw will free up new contribution room the following year1. In other words, withdrawals can be recontributed. |
What are the tax implications?
RRSP | TFSA |
---|---|
Withdrawals are taxed2 | Withdrawals are not taxed |
Investment income is taxed when you withdraw | Investment income is not taxed |
If you decease: Your RRSP savings will be taxed, unless they are transferred to a spouse, to a minor child or to a dependent disabled child. | If you decease: If you have a surviving spouse, your balance can be transferred to their TFSA tax-free, without affecting their contribution room. |
Contributions are deductible from your taxable income. | Contributions are not deductible from your taxable income. |
- Withdrawals of deliberate over-contributions, non-qualified investments and asset transfer transactions, and any income attributable thereto, do not create additional TFSA contribution room. Some of these types of income may be subject to a 100% taxation rate.
- Withdrawals from an RRSP are subject to tax deductions, and withdrawal fees may apply.