Loading
  • Linkedin
  • Twitter
  • Facebook
  • Youtube
Get in touch: 604.542.4298 | Toll Free: +1.877.542.4298
Connect Wealth
  • Home
  • About
    • Our Firm
    • Meet Our Team
  • Services
    • Personal Planning
    • Business Planning
  • Investments
  • Testimonials
  • Resources
  • News
  • Login
  • Contact us
  • Search
  • Menu
rrsp-tfsa
Investments

RRSP vs TFSA

Canadians have two great tools available for accumulating wealth, Registered Retirement Savings Plans (RRSPs) which were introduced in 1957 and Tax Free Savings Accounts (TFSAs) which were introduced in 2009.

We often get asked by clients which account type is better to contribute to, RRSPs or TFSAs. First, let’s look at the basic differences between the two:

Taxes

  • RRSP contributions are tax deductible (which results in you paying less income tax) but you have to pay tax on the money when you withdraw it.
  • TFSA contributions are not tax deductible, but withdrawals are tax free.

Contribution Limits

  • For RRSPs, 18 percent of the previous year’s income to a maximum of $24,930 in 2015 (less any pension adjustment.)
  • For TFSAs, the 2015 limit is $5,500. If you haven’t contributed to a TFSA since they were first introduced your cumulative limit is $36,500.

Age Limits

  • The last year that you can contribute to an RRSP is the year in which you turn age 71.
  • TFSAs have no age limits.

So which one is better to contribute to? The short answer is: That depends.

In general, if you expect your income to be higher in retirement, possibly due to a generous pension plan, a large amount of registered investments or other income then TFSA contributions may be the be better way to go. However, if like most people, your income will be higher during your working years than in retirement then it is usually more beneficial to make RRSP contributions first, due to the immediate tax savings, before making TFSA contributions. To get the most out of your RRSP contributions we encourage you to contribute your tax refund to your RRSP also. For many clients we recommend doing both. We encourage you to consult with your accountant or tax professional, we can recommend one to you if needed.

While RRSPs are usually better for retirement savings, TFSA are better for shorter term savings. Both account types allow a broad range of investments inside them; and the tax on the capital gains, dividends and interest income generated doesn’t have to be paid each year.

There is no annual deadline for TFSA contributions, however for any withdrawals made the corresponding contribution room will not be restored until January 1st of the following year. The deadline for RRSP contributions allowed to be deducted from the previous year’s income is March 1st (February 29th during a leap year) or the next business day.

February 12, 2015/by Vince Olfert
Tags: dividends, financial advisor, financial future, financial planner, financial planning, RRSP, savings, tax, TFSA
Share this entry
  • Share on Facebook
  • Share on Twitter
  • Share on Google+
  • Share on Pinterest
  • Share on Linkedin
  • Share on Reddit
  • Share by Mail
https://www.connectwealth.ca/wp-content/uploads/2015/02/rrsp-tfsa.png 419 569 Vince Olfert https://www.connectwealth.ca/wp-content/uploads/2020/01/ConnectWealth-logo-01.png Vince Olfert2015-02-12 09:58:442020-03-05 08:12:43RRSP vs TFSA
You might also like
singerolfert-superheros Superhero or Superhuman?
downsize house To Downsize Or Not?
UK pension UK Pension - Left Behind...
mortgage-insurance Mortgage Insured? Are Your Sure?
mortgage or rrsp Mortgage or RRSP?
Insuring Your Kids - Easily Overlooked!

Pages

  • About
  • About the Examination
  • Andrew Gordon
  • Antares
  • Appointment Contact Form
  • Baxter’s Business Planning
  • BCV
  • Business Planning
  • Cassandra San
  • Cher Adams
  • Chris Wiens
  • Client Login
  • Contact us
  • COVID-19 Safety Procedures
  • Disclaimer
  • dixonmitchell
  • Financial Terms Glossary
  • Home
  • Insurance Application Tips and What to Expect from a Paramedical Exam
  • Investments
  • Joey San
  • Julia Friesen
  • Kathe Atkinson
  • Meet Our Team
  • Melanie Tessarolo
  • Michelle Jones
  • Mike Erickson
  • News
  • Our Firm
  • Personal Planning
  • Preparing For The Examination
  • Privacy Policy
  • Reach Out Today
  • Referrals
  • Resources
  • Services
  • South Delta Hockey Contest
  • Testimonials
  • Vince Olfert

Categories

  • Business Planning
  • Current Events
  • Estate Planning
  • Insurance
  • Investments
  • Mortgages
  • News
  • Personal Planning
  • Real Estate
  • Retirement Planning
  • Tax Planning
  • Uncategorized

Archive

  • January 2021
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • November 2019
  • October 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • October 2018
  • September 2018
  • March 2018
  • February 2018
  • December 2017
  • May 2017
  • April 2017
  • February 2017
  • January 2017
  • October 2016
  • June 2016
  • February 2016
  • January 2016
  • October 2015
  • June 2015
  • February 2015
  • December 2014
Link to: Contact us

Have Questions? We’re here to help!


Our advisors are always ready to weigh-in on your financial strategies and help you develop the wealth management plan that’s right for you.

Reach out today!


Connect Wealth | 13-2970 King George Blvd. | South Surrey, BC V4P 0E6, Canada
Phone: 604.542.4298 | Toll Free: 877.542.4298 | Fax: 604.542.4289

© Copyright 2020 Connect Wealth. All rights reserved. Privacy Policy

Scroll to top

This website uses cookies. We use cookies to personalise content and ads, to provide social media features and to analyse our traffic. By continuing to use our site you are agreeing to our cookies privacy.

OKLearn More

Cookie and Privacy Settings

How we use cookies

We may request cookies to be set on your device. We use cookies to let us know when you visit our websites, how you interact with us, to enrich your user experience, and to customize your relationship with our website.

Click on the different category headings to find out more. You can also change some of your preferences. Note that blocking some types of cookies may impact your experience on our websites and the services we are able to offer.

Essential Website Cookies

These cookies are strictly necessary to provide you with services available through our website and to use some of its features.

Because these cookies are strictly necessary to deliver the website, you cannot refuse them without impacting how our site functions. You can block or delete them by changing your browser settings and force blocking all cookies on this website.

Google Analytics Cookies

These cookies collect information that is used either in aggregate form to help us understand how our website is being used or how effective our marketing campaigns are, or to help us customize our website and application for you in order to enhance your experience.

If you do not want that we track your visist to our site you can disable tracking in your browser here:

Other external services

We also use different external services like Google Webfonts, Google Maps and external Video providers. Since these providers may collect personal data like your IP address we allow you to block them here. Please be aware that this might heavily reduce the functionality and appearance of our site. Changes will take effect once you reload the page.

Google Webfont Settings:

Google Map Settings:

Vimeo and Youtube video embeds:

Privacy Policy

You can read about our cookies and privacy settings in detail on our Privacy Policy Page.

Privacy Policy