Benefits differ with RRSPs and TFSAs


The differences between RRSPs and Tax-free savings accounts:


– annual contributions are tax-deductible

– withdrawals are taxed as earned income

– maximum contribution, including pension plans, is 18 per cent of earned income or $22,970

– unused contributions can accumulate

– must be converted to a life annuity or registered retirement income fund by 71

– can affect government benefits


– contributions are not tax deductible

– withdrawals are not taxed

– maximum contribution is $5,500 a year regardless of income

– unused contributions can accumulate

– TFSAs don’t have to be converted to other investments

– won’t affect other government benefits.

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