RRSP or TFSA: which leaves you with more?
With the same net effort, compare the RRSP (deducted today, taxed on withdrawal), the TFSA (nothing in, nothing out) and a non-registered account.
- The amount entered goes into the RRSP; the TFSA and non-registered account receive the same amount minus the tax refund, so the effort is equal.
- The RRSP wins when your tax rate at withdrawal is lower than today; the TFSA wins in the opposite case, or when RRIF withdrawals would trigger the OAS clawback or reduce the GIS.
- Stay within your contribution room, shown on your notice of assessment and in CRA My Account.
- RRSP and TFSA limits of the year: Canada Revenue Agency
What this calculator is for
Compare, for the same savings effort, a tax-advantaged account with the other options, up to withdrawal.
How to read the result
The big number is the lead of the best option over the weakest. Each curve shows the net value if you withdrew everything that year.
Assumptions and limits
Tax rates are examples to replace with yours. Stay within the official limits of the year (link below the calculator).
Have the result checked
An adviser goes through these figures with your actual situation: tax, pensions, existing investments.
Frequently asked questions
When is the RRSP better than the TFSA?
When your marginal rate today is higher than it will be when you withdraw. At equal rates both give the same result, and the TFSA stays more flexible.
Should I reinvest the tax refund?
Yes: the comparison assumes the refund is saved. If it is spent, most of the RRSP advantage disappears.
What about the FHSA?
For a first home, the FHSA combines the RRSP deduction with the TFSA's tax-free withdrawal, so it usually comes first. A financial planner can help you order FHSA, RRSP and TFSA.