The Registered Retirement Savings Plan (RRSP) and the Tax Free Savings Account (TFSA) both offer tax efficient savings, but there are key differences, as noted below:
| Features | TFSA | RRSP |
|---|---|---|
| Purpose | General savings | Save for retirement |
| Tax deductible deposits | ✗ | ✓ |
| First 60-day contribution provision | ✗ | ✓ |
| Residency Requirements (Resident of Canada when the account is opened) | ✓ | ✗ |
| Contribution limit based on earned income | ✗ | ✓ |
| Spousal contributions allowed | ✗ | ✓ |
| Qualifying withdrawals impact federal gov't benefits | ✗ | ✓ |
| Maximum age limit (71) | ✗ | ✓ |
| Tax free growth | ✓ | ✓ |
| Tax free withdrawals | ✓ | ✗ |
| Pay back requirements | ✗ | ✓ |
| Transfers | Can transfer to a TFSA | Can transfer to an RRSP or RRIF |
| Tax treatment on death | Income earned after date of death is taxable to the beneficiary. The holder is not taxed on the date of death amount. | Income earned after date of death is taxable to the benefiary. There is no tax where the spouse transfers to an RRSP or RRIF. The holder is taxed on the date of death amount if not transferred to the spouse's registered account. |
| Maximum Contribution (2023) | Annual limit | Lessor of $30,780 or 18% of previous year's earned income. |