Understanding the Ecosystem
Choosing between different account types is not about finding the "best" one, but about understanding how they work together at different stages of your life. From the early accumulation years to drawing down income in retirement, each vehicle plays a specific strategic role.
| Feature | TFSA | RRSP | RRIF | Non-Registered |
|---|---|---|---|---|
| Tax on Entry | None (After-tax $) | Deductible (Pre-tax $) | N/A (Transfer from RRSP) | None (After-tax $) |
| Tax on Growth | None (Tax-free) | Deferred | Deferred | Annual (Cap Gains/Div/Int) |
| Tax on Exit | None (Tax-free) | Taxed as Income | Taxed as Income | Cap Gains (50% or 66.7%) |
| Mandatory Age | None | 71 (Convert to RRIF) | Annual Minimums | None |
| Best For | Flexibility | High Earners | Retirement Income | Overflow & Liquidity |
Funding Order & Strategy
Lower Income Years
Prioritize the TFSA. At lower tax brackets, the immediate deduction of an RRSP is less valuable than the long-term tax-free growth of the TFSA.
Peak Earning Years
Max out RRSP contributions to drop into a lower tax bracket. Reinvest the tax refund into your TFSA or Non-Registered accounts.
Retirement (Drawdown)
Convert RRSP to RRIF by age 71. Use TFSA withdrawals to stay under the OAS clawback threshold while meeting mandatory RRIF minimums.
Disclaimer: This guide is for educational purposes only and does not constitute financial or tax advice. Canadian tax laws are complex and subject to change. Consult a qualified professional for personalized planning.