RRSPs and TFSAs: frequently asked questions

Your new RRSP room each year is 18% of your previous year's earned income, up to a dollar limit, minus any pension adjustment from a workplace plan. The dollar limit is $32,490 for 2025, $33,810 for 2026 and $35,390 for 2027. Unused room carries forward, and your Notice of Assessment shows your current total.

The annual TFSA limit is $7,000 for 2026. Someone who was 18 or older in 2009, has lived in Canada since then and has never contributed would have $109,000 of cumulative room in 2026. Your own room depends on the year you turned 18 and your past contributions and withdrawals.

Neither is better in every case; much depends on your tax rate when you contribute compared with when you withdraw. In a calculator illustration, $10,000 of pre-tax income invested for 20 years at 5%, with the RRSP tax refund reinvested, grows to $19,900 after tax in an RRSP versus $18,573 in a TFSA when the tax rate falls from 30% to 25%; with the same 30% rate at both ends, the results are equal. The RRSP vs TFSA calculator lets you test your own rates, and RRSP vs TFSA for retirement explains the other factors.

RRSP and RRIF withdrawals are fully taxable income in the year you take them. TFSA withdrawals are not taxable and are not counted as income. That difference also affects income-tested benefits.

No. Because TFSA withdrawals are not income, they do not count toward the OAS recovery tax or the GIS income test. RRSP and RRIF withdrawals do count toward both. See the OAS and GIS FAQ.

The amount you withdraw is added back to your TFSA room at the start of the next calendar year, not right away. Re-contributing in the same year without enough room can lead to an over-contribution, so check your room with the CRA first.

An RRSP must be converted by December 31 of the year you turn 71, usually into a RRIF or an annuity, or withdrawn as cash, which is fully taxable. Converting earlier is also possible, which lets withdrawals start on your own schedule. See RRSP to RRIF conversion.

If you belong to a registered pension plan or deferred profit sharing plan, your employer reports a pension adjustment that reflects the value of your pension benefits for the year. It is subtracted from your new RRSP room, so members of generous plans can have little RRSP room. Your T4 and Notice of Assessment show the figures.

A spousal RRSP is one you contribute to for your spouse or common-law partner, using your own RRSP room and claiming the deduction yourself. Withdrawals are generally taxed to your spouse, though withdrawals soon after a contribution can be taxed back to the contributor under attribution rules; confirm the timing with the CRA. Spousal RRSP explains how couples use it.

You cannot contribute to your own RRSP after the year you turn 71. If you still have room and a younger spouse or common-law partner, contributions to a spousal RRSP may be possible until the year they turn 71. Check the current rules with the CRA.

In general, the value of an RRSP or RRIF is included in the deceased's final return unless it passes to a surviving spouse or another qualifying beneficiary, while a TFSA's value at death is not taxable. Beneficiary and successor designations matter, so confirm the rules with the CRA. See estate planning basics.

Yes. Room in each account is separate, and a plan can use both, for example an RRSP for income later and a TFSA for flexible, tax-free withdrawals. The retirement plan tool shows how the balances combine.