Get started with TFSA and RSP
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Tax-Free Savings Account
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Retirement Savings Plan
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TFSA vs. RSP
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.
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.
It’s fast and easy!
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:
Saving for any purpose
Not tax-deductible
Carried forward
Tax-free
You’re not taxed on withdrawals. They do not affect federal income-tested government benefits such as Old Age Security
Added to contribution room in future years
None; no upper age limit on contributions
n/a
You can hold GICs, mutual funds, stocks, bonds and other qualified investments
183
Retirement savings, home purchase or education
18% of previous year’s earned income (maximum limits apply), less pension adjustments
Tax-deductible
Carried forward
Tax-deferred
Money withdrawn is taxed as income at your marginal rate. Withdrawals may affect federal income-tested government benefits such as Old Age Security
Contribution room is lost for amounts you withdraw
End of year when you turn 71
You can contribute to a spousal RSP
You can hold GICs, mutual funds, stocks, bonds and other qualified investments
N/A
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TFSA
|
RSP
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---|---|---|
Primary purpose |
Saving for any purpose |
Retirement savings, home purchase or education |
Annual contribution amount |
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 |
1 Annual contribution limit for 2020 is $6,000. Annual contribution limit for 2019 was $6,000 and from 2016 to 2018 it 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. Annual TFSA contribution limit subject to change by the federal government.
1 Annual contribution limit for 2020 is $6,000. Annual contribution limit for 2019 was $6,000 and from 2016 to 2018 it 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. Annual TFSA contribution limit subject to change by the federal government.
2 The amount you withdraw is added back to your contribution room at the beginning of the year following the withdrawal and can be re-contributed to your TFSA in the following year or years.
3 The holder of a TFSA with TD must be of the age of majority in their province of residence.