What’s the difference between an RRSP and a TFSA?

Both the Registered Retirement Savings Plan (RRSP) and the Tax-Free Savings Account (TFSA) let you shelter your investment returns from taxes. Typically, you are able to place your money in a wide array of investments, like cash, GICs, stocks, and bonds.


An RRSP is a vehicle that can help you save for your retirement. With an RRSP, you don’t have to pay taxes on the money you put in today or any investment income earned until you withdraw your money in retirement.

The upside to this is that when you retire, you could potentially be in a lower tax bracket and pay fewer taxes.


A TFSA is more flexible long-term savings vehicle because it allows you to easily withdraw funds at any point without being taxed. Note that a withdrawal will impact the contribution room you have available in your TFSA.

Regardless, a TFSA is a another way to save for different financial goals beyond just retirement, such as a vacation, a home, or education.

Last updated January 10, 2022