Criteria RRSP TFSA Notes Contribution room based on earned income Yes No For an RRSP, contribution room accumulates, based on your earned income in the previous year. For a TFSA, contribution room is based on limits set by the government each year. While you need earned income to contribute to an RRSP, you do not need it to contribute to a TFSA. Tax-deductible contributions Yes No Contributions to an RRSP are tax-deductible; contributions to a TFSA are not. Qualified investment income on contributions is tax-sheltered Yes Yes Funds held in both account types typically grow tax-free with a few exceptions. Please visit the CRA web page for more details. Tax-free withdrawals No Yes For an RRSP, withdrawals are taxed as if they were earned income in that year; in this way, an RRSP allows you to defer tax until retirement. For a TFSA, withdrawals are not taxed. Age limit for contributions Yes No For an RRSP, there’s no minimum age for opening one—every Canadian is eligible as long as they have employment income and file a tax return. However, you have until the end of the year you turn 71 to close your RRSP (typically converting it to a Registered Retirement Income Fund, or RRIF). For a TFSA, you start earning contribution room at age 18. This increases every year for your entire life. Carry forward unused contribution room Yes Yes Unused contribution room carries forward for both account types.