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Call 1 844-542-4678 to speak to our advisors.
Call 1 844-542-4678 to speak to our advisors.
Call 1 844-542-4678 to speak to our advisors.
You can contribute to your RRSP at any time during the year, and the contributions can be made either in small amounts or in one lump sum up to the contribution limit.
You can even make contributions to your RRSP, without affecting your tax bill, 60 days after the year has ended. However, after this, it will affect your tax bill.
The government has made exceptions in the following cases:
Question |
RRSP |
TFSA |
What is the contribution limit? |
The limit is calculated each year and is sent to you by the Canada Revenue Agency after filing taxes for the previous year. |
The limit for 2020 is $6000. |
Can you carry forward the unused contribution room? |
Yes |
Yes |
If you make a withdrawal, will you be able to regain contribution room? |
No. But there are exceptions to this. |
Yes. The amount withdrawn will be added as contribution room in the following year. |
Is there a maximum age limit to make contributions? |
Yes. Contributions can be made till the end of the year you turn 71 years of age. |
No. |
When can you contribute to the plan? |
If you have contribution room, you can contribute at any time until the end of the year. The maximum time limit is 60 days after the end of the year. |
You can make contributions at any time, depending on the amount of contribution room available. |
Question |
RRSP |
TFSA |
Are contributions tax-deductible? |
Yes |
No |
Are withdrawals subject to income tax? |
Yes |
No |
Do the withdrawals count towards my taxable income? |
Yes |
No |
Is investment growth taxable? |
Only when you withdraw it. |
No. |
Question |
RRSP |
TFSA |
Is there an age limit for opening an account? |
No. Contributions can be made as soon as there is contribution room. |
Yes, you need to be at least 18 years of age. |
Do my savings need to be converted into income. |
Yes, they will have to be converted when the plan owner turns 71. This can be done by the end of the year of their 71 st birthday. |
No. |
Will government benefits like Old Age Security (OAS) or Employment Insurance (EI) be affected? |
The funds you withdraw from your RRSP will be considered as income and hence you will not be eligible for these plans. |
No. They will not be affected by the income earned or the amount withdrawn from your TFSA. |
Situation |
RRSP |
TFSA |
You want to buy your dream home. |
You can borrow up to $35,000 from an RRSP to make the down payment if you are a first-time homebuyer. |
You can use your tax-free withdrawals to make a down payment and even mortgage payments whenever you like. |
You want to settle down with the love of your life. |
Withdrawals from an RRSP are taxable. Starting a family can be expensive, so an RRSP withdrawal can be avoided here. |
You can make tax-free withdrawals from your TFSA to finance vacations or a wedding. |
You want to start a family. |
You can contribute to your RRSP regularly and start building your savings. |
With your TFSA you can make tax-free withdrawals to pay for baby care expenses. |
You want to see the world. |
Withdrawals are taxable, so you can avoid an RRSP for this. |
Use a TFSA and fund any vacation to any location. |
You want to study. |
An RRSP Lifelong Learning plan can be used to borrow up to $10,000 per year. |
You can even use a TFSA to pay off tuition fees and free up contribution room. This can be used to save money after you graduate. |
You want to save for retirement. |
Continue contributing to your RRSP and try to reach the limit every year. |
Continue growing your investments in a TFSA and make withdrawals once you are close to retirement. |
You want to retire. |
Save money till the age of 71. Making withdrawals after this age will ensure you are paying less tax on them. |
You can contribute to a TFSA as long as you are working. You can use it as retirement income whenever you like. |
You want to leave a legacy. |
RRSP allows you to nominate a beneficiary. You can transfer funds to them without having to pay a lot of tax. |
TFSA withdrawals remain tax-free even after your demise. You can leave money to anybody you nominate on your TFSA account. |
Call 1 844-542-4678 to speak to our advisors.