RRSP vs TFSA
RRSP vs TFSA comes down to your tax rate now versus in retirement. RRSP contributions are deducted today and taxed on withdrawal; TFSA contributions are after-tax and withdrawn tax-free. If your rate is higher now, the RRSP usually wins; if lower now, the TFSA often does.
Free · no sign-up · all 10 provinces · couples & Monte Carlo built in.
Side-by-side
| Feature | RRSP | TFSA |
|---|---|---|
| Contribution | Tax-deductible | After-tax |
| Withdrawal | Fully taxable | Tax-free |
| Affects OAS/GIS | Yes (counts as income) | No |
| Contribution room after withdrawal | Lost (except HBP/LLP) | Restored next year |
| Mandatory withdrawals | Yes — RRIF from 71 | Never |
The rule of thumb
Use the RRSP when your marginal tax rate today is higher than you expect in retirement; use the TFSA when it is lower, or when you want flexibility and to protect OAS/GIS. Many Canadians benefit from both. Retirely models the two together and picks a withdrawal order that minimises lifetime tax.
Frequently asked questions
Should I max my RRSP or TFSA first?
If your income (and marginal rate) is high, prioritise the RRSP for the deduction; if your income is modest or you value flexibility and protecting benefits, prioritise the TFSA. High earners often do both.
Does an RRSP or TFSA affect government benefits?
RRSP/RRIF withdrawals count as income and can trigger OAS clawback or reduce GIS. TFSA withdrawals do not count as income, so they do not affect these benefits.