TFSA or RRSP — which should I choose first?

If your income is below ~$50,000, a TFSA is usually better since the RRSP tax deduction is small. Above ~$50,000, the RRSP becomes advantageous thanks to the tax deduction. Ideally, maximize both.

Can I have both a TFSA and an RRSP?

Yes, both accounts are independent. Many Canadians contribute to both. The optimal strategy depends on your current tax rate versus your expected rate in retirement.

What is the TFSA vs RRSP limit in 2026?

The 2026 TFSA limit is $7,000 (cumulative max $109,000 since 2009). The RRSP limit is the lesser of $32,490 or 18% of 2025 earned income.

Are TFSA withdrawals taxed?

No, TFSA withdrawals are 100% tax-free. This is the main advantage of a TFSA. RRSP withdrawals, on the other hand, are added to your taxable income.

TFSA vs RRSP

Two registered investment accounts, two tax approaches. Which one is right for you?

TFSA

Tax-Free Savings Account

RRSP

Registered Retirement Savings Plan

Tax-deductible contributions

Not deductible

Reduces taxable income

Growth

Tax-free

Tax-sheltered

Tax-free withdrawals

100% tax-free

Taxed as income

Contribution room restored on withdrawal

Following year

Permanently lost

2026 annual limit

$7,000Same for everyone

$32,490or 18% of income

Cumulative limit

$109,000Since 2009

UnlimitedUnused room carries forward

Minimum age

18Canadian resident

NoneEarned income required

Maximum age

NoneContribute for life

71Must convert to RRIF

Affects government benefits

No impact on OAS/GIS

Withdrawals may reduce OAS

Ideal for emergency savings

Flexible withdrawals

Tax penalty on withdrawal

💡 Best strategy? Maximize both!

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TFSA vs RRSP

Frequently Asked Questions

TFSA vs RRSP

Frequently Asked Questions

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TFSA vs RRSP

Frequently Asked Questions

TFSA or RRSP — which should I choose first?

Can I have both a TFSA and an RRSP?

What is the TFSA vs RRSP limit in 2026?

Are TFSA withdrawals taxed?

Search

Search

TFSA vs RRSP

Frequently Asked Questions

TFSA or RRSP — which should I choose first?

Can I have both a TFSA and an RRSP?

What is the TFSA vs RRSP limit in 2026?

Are TFSA withdrawals taxed?