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There are a number of options when it comes to saving for the future. Some are more tax-efficient, while others provide more flexibility. Here is a comparison of 3 common savings vehicles — TFSA, RRSPs and Savings Accounts.

When examining your saving choices, it’s important to note there is no single or absolute answer that fits everyone’s situation. Instead, there are many considerations that may make a particular savings vehicle (or a combination of several vehicles) more suitable for you. In making a decision about where to save, remember to give some thought to your personal goals and objectives.

Here are the features of three common savings vehicles along with some considerations for you to consider:

TFSARRSPSavings account
What is it?A registered investment plan where your investment earnings and withdrawals are tax-free.A registered investment plan where your investment earnings are tax-deferred and your contributions are tax-deductible.An account with interest paid on every dollar, calculated daily and paid monthly.
How can I use it?Save for anything you want — short or long-term goalsSave for retirementSave for anything you want
Who owns the account?Individual onlyIndividual only (Learn about Spousal RRSPs)Individual or joint
Tax Treatment
Tax-deductible contributions?NoYesNo
Savings grow tax-free or tax-deferred?Tax-free (never taxed)Tax-deferred (taxed upon withdrawal)The interest you earn is taxable
Taxed withdrawals?Tax-free (never taxed)Taxed (added to taxable income the year the money is withdrawn)No
Annual contribution limits?$6,000 for 2022 (subject to change) plus previous years’ unused contribution room18% of the previous year’s earned income, less any pension adjustment, up to the maximum annual contribution limitNo limit
Over-contribution penalty tax?Yes, 1% per month on excess contributionsYes, 1% per month on excess contributions if you exceed the $2,000 lifetime over-contribution amountNo
Carry-forward of unused contribution room?Yes, indefinitelyYes, until the year you turn 71Not applicable/no limit
Need earned income to contribute?NoYesNo
Ability to contribute after age 71?YesNo, must convert to an RRIF or annuity by the end of the year you turn 71, or close the planYes
Withdraw savings for any reason?Yes, although timing depends on your investmentsYes, but taxes are withheld at the time of withdrawal (unless participating in the Home Buyer’s Plan or Lifelong Learning Plan)Yes, at any time
Withdrawals affect contribution room?Yes, withdrawal amounts are added to the contribution room the following yearNo, contributions are based on the previous year’s earned incomeNo
Withdrawals affect government benefits?NoYesNo


There isn’t a one-size-fits-all answer in deciding how you want to save. It’s a personal decision you should make based on your goals, circumstances, tax rates and personal habits. If you need help with the decision-making process, speak to a dedicated RBC Healthcare Specialist, who can help you examine your options.

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