RRSP or TFSA?
The tax rate gap decides it less often than people expect. This weighs that gap against the eight circumstances that regularly outrank it.
Your situation
The whole RRSP case rests on this being lower than your income now. Include CPP, OAS and any pension.
The lean
RRSP, leaning favoured
The RRSP has the edge here, but not an overwhelming one. A clear majority to the RRSP with the rest to a TFSA captures most of the benefit and keeps some flexibility.
Suggested share to RRSP
65%
Suggested share to TFSA
35%
How that score was reached
| Factor | Points |
|---|---|
| Tax rate gap: 20.5% now against 14.0% later | +2 |
| Total | +2 |
A positive score leans RRSP and a negative one leans TFSA. The tax rate gap uses federal brackets only. Provincial rates generally move in the same direction, so the lean rarely flips, but the size of the gap will differ from your real combined rate.
How much TFSA room you have
Room starts accruing that year, or 2009, whichever came later.
A withdrawal gives its room back, but not until 1 January of the following year. Money taken out this year does not count here yet.
Room available, from 2010 to 2026
$104,000
$104,000 accumulated in total. This is an estimate: only the CRA knows your real figure, and over-contributing costs 1% a month.
How much RRSP room you have
Box 52 of your T4. Zero if you have no workplace pension.
From your latest notice of assessment.
Room available
$13,500
$13,500 from this year, being 18% of earned income, less the pension adjustment. Your notice of assessment is the authority on this.