Benefits differ with RRSPs and TFSAs

The differences between RRSPs and Tax-free savings accounts:

RRSPs:

- annual contributions are tax-deductible

- withdrawals are taxed as earned income

- maximum contribution, including pension plans, is 18 per cent of earned income or $22,970

- unused contributions can accumulate

- must be converted to a life annuity or registered retirement income fund by 71

- can affect government benefits

TFSAs:

- contributions are not tax deductible

- withdrawals are not taxed

- maximum contribution is $5,500 a year regardless of income

- unused contributions can accumulate

- TFSAs don't have to be converted to other investments

- won't affect other government benefits.