Canada RRSP vs TFSA Calculator

When is RRSP better than TFSA?

RRSP wins when your marginal tax rate during contributions is significantly higher than your expected rate in retirement. This is typically true for: high earners (top brackets) who expect lower retirement income, those with generous DB pensions (know their retirement income), those converting RRSP to RRIF and drawing down steadily, and those using RRSP for the Home Buyers' Plan.

When is TFSA better than RRSP?

TFSA wins when: you're in a low tax bracket now (student, part-time, low income year), you expect your retirement income to be higher than current income, you already have significant RRSP/pension income that will push you into high brackets in retirement, or you want flexibility (TFSA withdrawals don't affect OAS/GIS clawbacks or income-tested benefits).

Should I maximize RRSP or TFSA first?

If you can only maximize one: use RRSP for income above ~$55,000 (where the marginal rate jumps). Use TFSA for income below ~$55,000. In practice, the best strategy for most Canadians is to use RRSP during high-income working years and TFSA during low-income years (mat leave, sabbatical, early retirement). Maximize both if financially possible.

Does it matter if I earn US dividends in RRSP vs TFSA?

Yes — US dividends are subject to 15% US withholding tax inside a TFSA (the Canada-US tax treaty doesn't apply to TFSA). Inside an RRSP, the treaty exempts retirement accounts from the 15% withholding. For this reason: hold US-dividend-paying stocks in RRSP; hold Canadian dividend stocks and growth ETFs in TFSA.