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Compare TFSA vs RRSP vs FHSA

Wondering if a TFSA, RRSP or FHSA may be right for you? Discover how each of these accounts can help you reach your goals—and remember, you don’t have to pick just one! 1Legal
Responsive Table Example
Feature TFSA RRSP FHSA
What is it?

A registered plan where your investment earnings and withdrawals are tax-free

Explore TFSAs

A registered plan where your contributions are tax-deductible (up to your personal deduction limit) and investment earnings are tax-deferred (you are charged taxes when you withdraw funds)

Explore RRSPs

A new registered plan designed to help first time homebuyers. Your contributions are tax-deductible and investment earnings and withdrawals are tax-free if used to purchase your first home

Explore FHSAs
What is it typically used to save for? Shorter term goals (new bike, vacation, home reno, etc.) or longer term (retirement or home ownership) Retirement Your first home
Who can open one?

Canadian residents with a Social Insurance Number (SIN) who are at least 18 or 19 (age of majority in your province)

Canadian residents with a Social Insurance Number (SIN) who are under age 71, have earned income and file a tax return in Canada

Canadian residents with a Social Insurance Number (SIN) who are at least age 18 (and no less than the age of majority in your province) and under age 71, and you and/or your spouse or common-law partner have not owned a home where you lived in the current calendar year or at any time in the preceding four calendar years
What types of investments can I hold in it?3 Legal,4 Legal,7 Legal

More products will be available over time.
Can the plan be opened jointly? No—a TFSA is an individual plan No—an RRSP is an individual plan, but you can contribute to a spousal RRSP No—an FHSA is an individual plan
Tax Treatment
Are contributions tax-deductible? No Yes (up to your personal deduction limit) Yes (up to the annual and lifetime limits)
Do my savings grow tax-free or tax-deferred? Tax-free Tax-deferred (added to taxable income the year you take the money out; a withholding tax will also apply to early withdrawals) Tax-free as long as you use funds for a qualifying first home
Contributing Money
How much can I contribute each year? $7,000 for 2024 plus your unused contribution room and any amounts you’ve withdrawn from previous years 18% of previous year’s earned income, less any pension adjustment, up to maximum annual limit ($30,780 for 2023) $8,000 annually, plus up to $8,000 of your unused contribution room, up to a maximum lifetime limit of $40,000
Is there an over-contribution penalty tax? Yes, 1% per month on excess contributions Yes, 1% per month on excess contributions (if you exceed your deduction limit by $2,000) Yes, 1% per month on excess contributions
Can I carry forward unused contribution room? Yes, indefinitely Yes, until December 31 of the year you turn 71

Yes, unused contribution room can be carried over to the next year, up to a maximum of $8,000
Do I have to earn income to get contribution room? No Yes No
Can I contribute after age 71? Yes

No, you must convert to a RRIF or purchase an annuity, or close the plan by December 31 of the year you turn 71.

You can convert your plan to a RRIF or annuity to receive a steady stream of income, or make a taxable withdrawal for the full balance of your plan.

No, the funds in your FHSA must be used by the 15th anniversary of opening the FHSA or December 31 of the year you turn 71, whichever comes earlier.

If you have not used your funds by that time, they can be transferred (tax-free) to your RRSP without impacting your RRSP contribution room, or to your RRIF. Otherwise, your withdrawal will be taxable.
Withdrawing Money
Can I take my money out for any reason? Yes, although timing depends on what investments you hold in your TFSA. Yes, but taxes are withheld at the time of withdrawal (unless participating in the Home Buyers’ Plan or Lifelong Learning Plan)

Yes, although timing depends on what investments you hold in your FHSA.

If you use the funds for anything other than a qualifying first home, your withdrawal will be taxable.

If I withdraw money, do I get my contribution room back? Yes, withdrawal amounts are added to contribution room the following year

No, withdrawals have no bearing on your deduction limit or contribution room.

Home Buyer Plan withdrawals need to be contributed back over 15 years.

 No
Do withdrawals affect government benefits? No Possibly, yes—withdrawals increase your income, which could impact government benefits like Old Age Security (OAS) payments

It depends on type of withdrawal:

  • Withdrawals used to purchase a qualifying home will not affect government benefits
  • Non-qualifying withdrawals increase your income, which could impact government benefits like Old Age Security (OAS) payments

Start Investing Today

Select the type of account that you’d like to open:

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There may be commissions, trailing commissions, investment fund management fees and expenses associated with investment fund and exchange-traded fund (ETF) investments. On or after June 1, 2022, any trailing commissions paid to RBC Direct Investing Inc. will be rebated to clients pursuant to applicable regulatory exemptions. Before investing, please review the applicable fees, expenses and charges relating to the fund as disclosed in the prospectus, fund facts or ETF facts for the fund. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. For money market funds there can be no assurances that the fund will be able to maintain its net asset value per security at a constant amount or that the full amount of your investment in the fund will be returned to you.

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Subject to each account’s eligibility requirements.
Assets in a TFSA must be Qualified Investments under the Income Tax Act. If the TFSA holds non-Qualified Investments, it could be subject to tax.
Assets in an RRSP must be Qualified Investments under the Income Tax Act. If the RRSP holds non-Qualified Investments, it could be subject to tax.
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Assets in an FHSA must be Qualified Investments under the Income Tax Act. If the FHSA holds non-Qualified Investments, it could be subject to tax.