• Cgeldert@shaw.ca
(403) 620-8534
Christopher Geldert, CA
  • HOME
  • ABOUT
    • ABOUT
    • SUPPLIERS
    • RESOURCES
    • PRIVACY & TERMS
  • SERVICES
    • INSURANCE PLANNING
      • LIFE INSURANCE
      • MORTGAGE LIFE INSURANCE
      • DISABILITY INSURANCE
      • CRITICAL ILLNESS INSURANCE
      • HEALTH & DENTAL
      • TRAVEL INSURANCE
    • FAMILIES
      • ESTATE PLANNING
      • ESTATE PLANNING FOR MATURE FAMILIES & RETIREES
      • INSURANCE PLANNING
    • BUSINESS OWNERS
      • INSURANCE PLANNING
      • ESTATE PLANNING
  • CONTACT
  • LATEST NEWS
  • Search
  • Menu Menu

TFSA versus RRSP – What you need to know to make the most of them in 2022

2022, Blog, RRSP, Tax Free Savings Account

TFSA versus RRSP – What you need to know to make the most of them in 2022

TFSAs and RRSPs can be significant savings vehicles. To help you understand their differences, we have put together this article to compare:

  • TFSA versus RRSP – Differences in deposits

  • TFSA versus RRSP – Differences in withdrawals

TFSA versus RRSP – Difference in deposits

There are four main areas to focus on when comparing differences in deposits for 2022:

  1. Contribution Room

  2. Carry Forward

  3. Contributions and Tax Deductibility

  4. Tax Treatment of Growth

How much contribution room do I have?

If you have never opened a TFSA before, you can contribute up to $81,500 today. This table outlines the contribution amount you are allowed each year since TFSAs were created, including this year:

For RRSPs, the contribution limit is always 18% of your previous year’s pre-tax earnings to a maximum of $29,210. For example, if you earned $60,000 in 2021 then your contribution limit for 2022 would be $10,800 (18% x $60,000). If you earned $200,000, your contribution limit would be capped at the maximum of $29,210.

How much contribution room can I carry forward?

If you choose not to contribute to your TFSA at all one year or do not contribute the maximum amount in a year, you can indefinitely carry forward your unused contribution room. The only restrictions on this are that you must be a Canadian resident, older than 18, and have a valid social insurance number. In addition, if you make a withdrawal, the amount you withdrew is added to your annual contribution room for the following calendar year.

For an RRSP, you can carry forward your unused contribution room until the age of 71. When you turn 71, you must convert your RRSP into an RRIF. If you make a withdrawal from your RRSP, you do not open up any additional contribution room.

Contributions and Tax Deductibility

Your TFSA contributions are not tax-deductible and are made with after-tax dollars. Your RRSP contributions are tax-deductible and are made with pre-tax dollars.

Tax Treatment of Growth

One of the reasons it is essential to make both RRSP and TFSA contributions is that investment value growth is treated differently.

A TFSA is more suitable for short-term objectives like saving for a house down payment or a vacation because the investment value growth is tax-free. In addition, when you make a withdrawal from your TFSA, you will not have to pay income tax on the amount withdrawn.

The growth in an RRSP is tax-deferred, meaning you will not pay any taxes on your RRSP gains until you withdraw money from your future RRIF account; the account you convert your RRSP into at age 71. As a result, RRSPs are better suited for long-term objectives, like retirement. In addition, since you will have a lower income in retirement than when you are working, you will be in a lower tax bracket and not pay much tax on your RRIF income.

TFSA versus RRSP – Differences in withdrawals

There are four main areas to focus on when comparing differences in withdrawal for 2022:

  1. Conversion Requirements

  2. Tax Treatment

  3. Government Benefits

  4. Contribution Room

Conversion Requirements

For a TFSA, there are never any conversion requirements as there is no maximum age for a TFSA. However, if you have an RRSP, you must convert it to a Registered Retirement Income Fund (RRIF) if you turn 71 by December 31st of 2022.

Tax Treatment Of Withdrawals

One of the most attractive things about a TFSA is that all your withdrawals are tax-free! This ability to withdraw funds tax-free is why TFSAs are advantageous for short-term goals; you don’t have to worry about taxes when you take money out to pay for a house or a dream vacation.

With an RRSP, if you make a withdrawal before converting it to a RRIF, it will be taxed as income except in two cases:

  1. The Home Buyers Plan lets you withdraw up to $35,000 tax-free, but you must pay it back within fifteen years.

  2. The Lifelong Learning Plan lets you withdraw up to $20,000 ($10,000 maximum per year) tax-free, but you must pay it back within ten years.

How will my government benefits be impacted?

If you are withdrawing from your TFSA or RRSP, it is essential to know how your withdrawals can impact any benefits you receive from the government.

Since TFSA withdrawals are not considered taxable income, they will not impact your eligibility for income-tested government benefits.

RRSP withdrawals are considered taxable income and can affect the following:

  • Income-tested tax credits such as Canada Child Tax Benefit, the Working Income Tax Benefit, the Goods and Services Tax Credit, and the Age Credit.

  • Government benefits including Old Age Security, Guaranteed Income Supplement and Employment Insurance.

How will a withdrawal impact my contribution room?

If you make a withdrawal from your TFSA, then the amount you withdrew will be added on top of your annual contribution room for the following calendar year. However, if you withdraw money from your RRSP, you do not open up additional contribution room.

The Takeaway

RRSPs and TFSAs can both be great savings vehicles. With this in mind, understanding the differences between these two types of tax-advantaged accounts can help you better plan for future purchases and your eventual retirement.

January 31, 2022/by Chris Geldert
Share this entry
  • Share on Facebook
  • Share on Twitter
  • Share on WhatsApp
  • Share on Pinterest
  • Share on LinkedIn
  • Share on Tumblr
  • Share on Vk
  • Share on Reddit
  • Share by Mail
https://chrisgeldert.ca/wp-content/uploads/2022/02/TFSA-vs-RRSP-2022.png 281 500 Chris Geldert https://chrisgeldert.ca/wp-content/uploads/2020/05/christopherGeldertLogo5.png Chris Geldert2022-01-31 07:36:032022-02-01 10:37:26TFSA versus RRSP – What you need to know to make the most of them in 2022

Pages

  • ABOUT
  • ADVANTAGE ACCOUNT
  • BLOG
  • BUSINESS CONTINUATION
  • BUSINESS SUCCESSION
  • CONTACT
  • CRITICAL ILLNESS INSURANCE
  • CRITICAL ILLNESS INSURANCE
  • DISABILITY INSURANCE
  • DISABILITY INSURANCE
  • EMPLOYEE BENEFITS
  • ESTATE PLANNING
  • Estate Planning for Business Owners
  • Estate Planning for Retirees and Mature Families
  • Estate Planning for Young Families
  • EXECUTIVE BENEFITS
  • Families
  • Farms
  • FINANCIAL ADVICE
  • FINANCIAL ADVICE FOR BUSINESS OWNERS
  • FINANCIAL ADVICE FOR BUSINESS OWNERS
  • FINANCIAL ADVICE FOR SENIORS
  • FLEXCARE, ASSOCIATION, HEALTH AND DENTAL PLANS
  • GROUP BENEFITS
  • GROWING FAMILIES
  • GUARANTEED INVESTMENT CERTIFICATES
  • HOME
  • How will rising interest rates impact Canadians?
  • INDIVIDUAL HEALTH AND DENTAL PLANS
  • Insurance Planning
  • Insurance Planning for Business Owners
  • Insurance Planning for Young Families
  • INVESTMENT PLANNING
  • LATEST NEWS
  • LIFE INSURANCE
  • Life Insurance
  • LIFE STAGES
  • MATURE FAMILIES
  • Mortgage Insurance
  • MORTGAGE LIFE INSURANCE
  • Non Registered Investments
  • Planning for Seniors
  • Preparing for Retirement
  • PRIVACY STATEMENT AND WEBSITE TERMS OF USE
  • REGISTERED DISABILITY SAVINGS PLAN
  • REGISTERED DISABILITY SAVINGS PLAN
  • REGISTERED EDUCATION SAVINGS PLAN
  • REGISTERED EDUCATION SAVINGS PLAN
  • REGISTERED RETIREMENT INCOME FUND
  • REGISTERED RETIREMENT INCOME FUND
  • REGISTERED RETIREMENT SAVINGS PLAN
  • REGISTERED RETIREMENT SAVINGS PLAN
  • Resources
  • RETIREES
  • RETIREMENT PLANNING
  • Retirement Planning for Business Owners
  • Retirement Planning for Employees
  • SERVICES
  • STARTING YOUR CAREER
  • STRATEGIC PARTNERSHIPS
  • SUPPLIERS
  • SUPPLIERS-old
  • TAX FREE SAVING ACCOUNT
  • TAX FREE SAVING ACCOUNT
  • Test Page
  • THE NEED FOR CORPORATE LIFE INSURANCE
  • The Need for Corporate Life Insurance
  • THE NEED FOR PERSONAL LIFE INSURANCE
  • The Need for Personal Life Insurance
  • TRAVEL INSURANCE

Categories

  • 2020
  • 2020 Only
  • 2021
  • 2022
  • 2022 Only
  • 2023
  • 2024
  • 2025
  • Accountants
  • Blog
  • Budget
  • Business Owners
  • Business Owners
  • Business Succession
  • Business Succession Planning
  • Buy Sell
  • Center of Influences
  • Charitable Gifting
  • Coronavirus
  • Coronavirus – Associates
  • Coronavirus – Practice Owners
  • Coronavirus – Retired
  • Coronavirus – Retiring
  • Coronavirus – Students
  • corporate
  • Critical Illness Insurance
  • Debt
  • dental benefits
  • disability
  • Disability Insurance
  • Estate Planning
  • Family
  • farmers
  • Finance
  • financial advice
  • Financial Planning
  • Government Budget
  • Group Benefits
  • health benefits
  • incorporated professionals
  • individuals
  • Insurance
  • Investment
  • Life Insurance
  • long term care
  • mortgage
  • Ontario Only
  • pension plan
  • personal finances
  • Professional Corporations
  • Professionals
  • RDSP
  • Registered Education Savings Plan
  • Retirees
  • Retirement
  • RRSP
  • RRSP
  • tax
  • Tax Free Savings Account
  • Travel Insurance

Archive

  • July 2025
  • June 2025
  • May 2025
  • April 2025
  • March 2025
  • February 2025
  • January 2025
  • December 2024
  • November 2024
  • October 2024
  • September 2024
  • August 2024
  • July 2024
  • June 2024
  • May 2024
  • April 2024
  • March 2024
  • February 2024
  • January 2024
  • December 2023
  • November 2023
  • October 2023
  • September 2023
  • August 2023
  • July 2023
  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020

Chris Geldert CPA, CA, CLU, CEA

Navigating corporate structures and the insurance world can be difficult. I specialize in assisting business owners protect, realize and transfer the value of their business and corporate wealth. I guide owners through the process and work with their various professionals to ensure solutions implemented properly manage risks and maximize benefits. Above all, I work to earn your business.

Subscribe to my newsletter

* indicates required



Contact Me

Tel: (403) 620-8534

E: Cgeldert@shaw.ca

© 2020 Financial Tech Tools Inc. - Enfold WordPress Theme by Kriesi
2022 Financial Calendar Having Your Cake and Eating it Too
Scroll to top