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Tax-Free Savings Account
Retirement Savings Plan
TFSA vs. RSP

What is a TFSA?

A Tax-Free Savings Account (TFSA) is a registered savings plan registered with the Canada Revenue Agency (CRA). You can save or invest up to $6,000¹ a year in a TFSA.

Through a TFSA, you can put your savings into eligible investments, such as mutual funds, GICs, stocks and bonds.

You’re not taxed on the income you earn, so it’s a great way to save for short- or long-term goals because it lets your savings grow tax-free.

How much can I contribute?

The TFSA contribution limit for 2019 is $6,000¹. Annual contribution limit from 2016 to 2018 was $5,500. Annual contribution limit for 2015 was $10,000. Annual contribution limit from 2013 to 2014 was $5,500. Annual contribution limit from 2009 to 2012 was $5,000.
Any unused contribution room is carried forward from previous years. For example, if you’ve never contributed to a TFSA before, you can contribute up to $63,500 in 2019.

TFSA Calculator

Use our TFSA Calculator to see how your investments could grow, tax-free, compared to a taxable account.

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What is an RSP?

A registered Retirement Savings Plan (RSP) is a savings plan that is registered with the Canadian government. Contributions to your RSP reduce your taxable income, which allows you to pay less tax now and potentially build a larger retirement fund for the future. You only pay tax on the amount you withdraw. Contributions can only be made by individuals with “earned income” that is taxable in Canada. You can also contribute to an RSP in the name of your spouse or common-law partner.

Using an RSP to buy a home

The RSP Home Buyers' Plan (HBP) lets a first time buyer withdraw up to $35,000 from their RSPs for a home purchase¹.
The withdrawn amount must be repaid to your RSP within 15 years, subject to a minimum annual repayment that is 1/15 of the amount withdrawn.
If the full $35,000 is withdrawn, the minimum annual repayment is $2,333. If less than the minimum is repaid in any particular year, the balance is added to the taxpayer's income.
For more information, check the Canada Revenue Agency Publication.

Using an RSP to pay for education

The Lifelong Learning Plan (LLP) allows you to withdraw amounts from your RSP to finance eligible training or education for you, your spouse or your common-law partner.¹
You do not have to include the withdrawn amount in your income and there is no withholding tax on these amounts. You may withdraw up to $10,000 each year under this program for qualified education expenses. The maximum lifetime withdrawal amount is $20,000 over a period of no more than four years.
These withdrawals must be repaid to your RSP over a period of no more than 10 years.
Any amount that you do not repay when it is due will be included in your income for the year it was due.
For more information, check out the Canada Revenue Agency publication.

Retirement Savings Calculator

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Find out how much you’ll need to save to reach your retirement goals.

¹ Subject to conditions and eligibility.

Where to put your savings?

Whether your savings goal is for a comfortable retirement, homeownership or education, both RSPs and TFSAs can be a good option. To learn more, take a look at the comparison chart below:

The difference between TFSAs and RSPs

TFSA

Expand

Primary purpose

Saving for any purpose
Annual contribution amount

$6,000¹ PLUS amounts withdrawn in previous years²
Contributions

Not tax-deductible
Unused contribution room

Carried forward
Growth

Tax-free
Withdrawals

You’re not taxed on withdrawals. They do not affect federal income-tested government benefits such as Old Age Security
Withdrawn amounts

Added to contribution room in future years
Plan maturity

None; no upper age limit on contributions
Spousal plan

n/a
Eligible investments

You can hold GICs, mutual funds, stocks, bonds and other qualified investments
Age minimum

18³

RSP

Expand

Primary purpose

Retirement savings, home purchase or education
Annual contribution amount

18% of previous year’s earned income (maximum limits apply), less pension adjustments
Contributions

Tax-deductible
Unused contribution room

Carried forward
Growth

Tax-deferred
Withdrawals

Money withdrawn is taxed as income at your marginal rate. Withdrawals may affect federal income-tested government benefits such as Old Age Security
Withdrawn amounts

Contribution room is lost for amounts you withdraw
Plan maturity

End of year when you turn 71
Spousal plan

You can contribute to a spousal RSP
Eligible investments

You can hold GICs, mutual funds, stocks, bonds and other qualified investments
Age minimum

N/A

	TFSA	RSP
Primary purpose	Saving for any purpose	Retirement savings, home purchase or education
Annual contribution amount	$6,000¹ PLUS amounts withdrawn in previous years²	18% of previous year’s earned income (maximum limits apply), less pension adjustments
Contributions	Not tax-deductible	Tax-deductible
Unused contribution room	Carried forward	Carried forward
Growth	Tax-free	Tax-deferred
Withdrawals	You’re not taxed on withdrawals. They do not affect federal income-tested government benefits such as Old Age Security	Money withdrawn is taxed as income at your marginal rate. Withdrawals may affect federal income-tested government benefits such as Old Age Security
Withdrawn amounts	Added to contribution room in future years	Contribution room is lost for amounts you withdraw
Plan maturity	None; no upper age limit on contributions	End of year when you turn 71
Spousal plan	n/a	You can contribute to a spousal RSP
Eligible investments	You can hold GICs, mutual funds, stocks, bonds and other qualified investments	You can hold GICs, mutual funds, stocks, bonds and other qualified investments
Age minimum	18³	N/A

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Get started with TFSA and RSP

Tax-Free Savings Account

Retirement Savings Plan

TFSA vs. RSP

What is a TFSA?

How much can I contribute?

TFSA Calculator

What is an RSP?

Using an RSP to buy a home

Using an RSP to pay for education

Retirement Savings Calculator

Where to put your savings?

The difference between TFSAs and RSPs

TFSA

Primary purpose

Annual contribution amount

Contributions

Unused contribution room

Growth

Withdrawals

Withdrawn amounts

Plan maturity

Spousal plan

Eligible investments

Age minimum

RSP

Primary purpose

Annual contribution amount

Contributions

Unused contribution room

Growth

Withdrawals

Withdrawn amounts

Plan maturity

Spousal plan

Eligible investments

Age minimum

Related Topics

Compound Interest Calculator

TFSA Options

RSP Options

RSP Home Buyers' Plan

You may also be interested in:

Contribution Limits & Withdrawal Rules

TFSA vs. RRSP: What is the difference?

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