Which is the better way to save for the future and get a tax break: an RRSP, a TFSA – or both? Comparing the two can help you decide.
18% of your previous year's earned income to a maximum amount set each year by the Income Tax Act and Regulations, plus any unused contribution room carried forward from prior years.
A variety of investments, such as treasury bills, guaranteed interest products, mutual funds, segregated fund contracts, bonds and equities. Some types of investment contracts, such as registered guaranteed investment fund contracts, are themselves RRSPs. Your investment growth will depend on the performance of the investments you choose.
Not until it’s withdrawn.
No. You only need RRSP contribution room.
You can open an RRSP as soon as you start earning an income.
By the end of the year you turn 71.
No. Withdrawals may only be redeposited if you have sufficient additional contribution room (once withdrawn, you never get the contribution room back).
A variety of investments, such as treasury bills, guaranteed interest products, mutual funds, segregated fund contracts, bonds and equities. Your investment growth will depend on the performance of the investments you choose.
You have to be at least 18 to open a TFSA.
There is no requirement at any age to take the cash or convert your plan to an income payment option – for most investment products. Some insurance products such as deferred annuity products, however, do have a maturity date that you need to be aware of and plan for with your advisor.
Yes. Any withdrawals may be redeposited the same calendar year if you have sufficient contribution room left, and in subsequent calendar years if you don’t.