What to know before choosing a plan
Plain-language information, designed to help you compare meaningful differences.
How does an RRSP help?
An RRSP is generally most beneficial when a tax deduction is valuable now and future withdrawals can be managed at an acceptable effective tax rate. Employer matching, income-tested benefits and pension participation may influence the decision.
Contributions are limited by your own available room. RRSP withdrawal amounts are generally included in taxable income; withholding tax at source may not settle the total eventual liability.
Why does the TFSA recontribution rule matter?
A TFSA is flexible for short- and long-term goals, but withdrawal room is usually restored only on January 1 of the next calendar year. If you withdraw and recontribute in the same year without unused room, you risk an over-contribution penalty.
Check your own records and CRA’s TFSA withdrawal guidance ↗.
Where does the FHSA fit?
The First Home Savings Account is designed for eligible first-time home buyers. Qualifying contributions can be deductible and qualifying withdrawals may be tax-free; account opening and lifetime participation conditions apply.
If a first-home purchase is likely, compare the benefits of FHSA contributions with RRSP and TFSA contributions—but do not exceed applicable room.
A reasonable order for many households
Before optimizing taxes, establish enough liquid savings for emergencies and make a plan for high-cost debt. Capture employer retirement matching where available. Then use contribution priorities that reflect tax brackets, purchase timelines and available room.
There is no universal “RRSP first” or “TFSA first” rule. Registered account decisions should fit the household’s full situation.