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Maximizing RRSPs and TFSAs: Getting the most out of two powerful tax-advantaged vehicles


If you’re looking for ways to save and grow your money in a tax-advantaged manner, both registered retirement savings plans (RRSPs) and tax-free savings accounts (TFSAs) offer valuable benefits. However, like many investors, you may still be wondering about the difference between them and how to maximize the tax-deferred growth of each.

Your decision to invest your savings in one or a combination of these tax-advantaged vehicles depends on your personal situation, needs and objectives.

To help you understand the differences, benefits or how they may directly complement your savings strategy or specific long-term goals, here’s a helpful breakdown of the differences.  

Comparing the features of RRSPs and TFSAs




Contribution limit

18% of the previous year’s earned income (up to a specified limit), less any applicable pension adjustments, plus any unused contribution room from prior years.

$6,000 per year, indexed to inflation annually, in increments of $500, plus any unused contribution room from prior years.

Tax deductibility

Contributions, up to your RRSP contribution limit, can be deducted from taxable income when calculating personal income tax.

Contributions are not eligible for any tax deduction.

Growth of investments

Investments grow tax-deferred until the funds are withdrawn.

Investments grow tax-free.


A cumulative lifetime maximum of $2,000 is allowed. Otherwise, excess funds are subject to a 1% penalty per month until withdrawn.

Excess funds are subject to a 1% penalty per month until withdrawn.


Withdrawals are taxed as regular income, added to any other sources of income and taxed at the applicable marginal tax rate. Withdrawals do not restore any contribution room.

Withdrawals are not taxed. Contribution room is restored the following calendar year.

At retirement

Must be closed/converted by December 31 of the year the account owner turns 71.

Can be held indefinitely.



The Home Buyers’ Plan (HBP) allows first-time home buyers to withdraw up to $35,000.

The Lifelong Learning Plan (LLP) allows for a withdrawal of up to $20,000 (annual limit of $10,000) for the account owner or spouse to attend a qualified post-secondary program.

Both of these withdrawals are tax-free provided certain conditions are met. Generally, funds withdrawn under the HBP must be repaid over a 15-year period, whereas funds withdrawn under the LLP must be repaid over 10 years.

No additional programs are currently available.

Need further clarification?

As you can see from the table, both RRSPs and TFSAs can help you meet your long-term goals in different ways. You can learn more if you need further clarification—via realistic case studies—on how RRSPs and TFSAs can add value to your financial plan.

Your MD Advisor can answer any questions you may have about RRSPs, TFSAs, and how to use these tax-advantaged vehicles based on your individual needs.

Learn more about MD's investments offering or contact your MD Advisor to find out how we can help.