TFSA vs RRSP

Purpose and Fit

Both accounts encourage saving and investing. One offers tax-free growth and withdrawals; the other defers tax until withdrawal. The better fit depends on your current and future tax rates.

Quick Comparison (High Level)

Contribution & Withdrawal Strategy

Many investors use both: contribute to the account that best matches today’s income situation, then revisit annually. Integrate contributions with your overall asset allocation.

• Asset allocation basics
• Compound interest basics

FAQs

Can I hold ETFs in either account?

Yes, you can typically hold ETFs in both accounts; details vary by jurisdiction and provider.

Which should I prioritize?

It depends on your current vs expected future tax rate. Many investors prioritize the account that offers the better after-tax outcome.

Related Guides

• Compound Growth in Retirement
• FHSA Basics
• RRSP Withholding Taxes

2026 limits (from the CRA)

• TFSA: the 2026 TFSA dollar limit is $7,000. Unused room carries forward.
• RRSP: the 2026 RRSP dollar limit is $33,810. Your own deduction limit is 18% of the previous year's earned income up to that amount, plus unused room, minus pension adjustments. It is shown on your notice of assessment.
• FHSA: participation room in the first year you open an FHSA is $8,000.

Checked on canada.ca on October 14, 2026. Your own room depends on your history, so confirm it in CRA My Account.

U.S. counterpart

• 401(k) vs IRA
• Roth vs Traditional IRA

Sources

• Canada Revenue Agency: What is a TFSA
• Canada Revenue Agency: Guide T4040, RRSPs and Other Registered Plans for Retirement
• Canada Revenue Agency: RRSP and TFSA dollar limits
• Canada Revenue Agency: First Home Savings Account (FHSA)

Reviewed by Greg Parsons. Links checked October 14, 2026. Educational only, not financial advice.