RRSP and TFSA Comparison

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:

  • Save for retirement
  • Buy or build your first home
  • Pay for your education
Use it to:

  • Renovate your home
  • Buy a car
  • Start a business
  • Travel
  • Plan for retirement
Cannot be used as collateral for a loan. Can be used as collateral for a loan.

When should you contribute?

RRSP TFSA
Deadline: March 1, 2019 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 (e.g., $26,230 in 2018 and $26,500 in 2019)

If you contribute to an employer-sponsored plan, it will reduce your contribution room.

Annual contribution limit:

  • 2009 to 2012: $5,000
  • 2013 and 2014: $5,500
  • 2015: $10,000
  • 2016 to 2018: $5,500
  • 2019: $6,000
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If you’re receiving government benefits or credits, money withdrawn from your RRSP is considered taxable income, so it may reduce your benefits.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 year.1. In other words, withdrawals can be recontributed.

What are the tax implications?

RRSP TFSA
Withdrawals are taxed.2 Withdrawals are not taxed.
Investment income is taxed when you withdraw. Investment income is not taxed.
If you die: 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 die: 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.
  1. 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.
  2. Withdrawals from an RRSP are subject to tax deductions, and withdrawal fees may apply.