Media Advisory - TFSA vs. RRSP - Which Is Right For You?

BMO Provides Clarity in the Debate

TORONTO, Jan. 21 /CNW/ - Canadians are saving more today than they have at any point in the last decade, and there is no shortage of investment options available for them to consider - whether it be RRSPs, RDSPs, or RESPs

Since its introduction in 2009, the Tax Free Savings Account (TFSA) has proven to be one of the more popular investment choices. According to a recent BMO Economics report, more than 3.5 million Canadians opened a TFSA in the first six months it was made available.

With RRSP season upon us and people paying closer attention to their investments, many are wondering how the TFSA fits into their overall portfolio and how much should be contributed to a RRSP versus a TFSA.

Tina Di Vito, Director, Retirement Strategies, BMO Financial Group, is available to help provide some clarity around the following:

    -   Should you contribute to a TFSA, an RRSP, or both?
    -   What are the advantages of each? The drawbacks?
    -   What type of investor should you be this RRSP season, in light of all
        that has happened in the economy this past year?
    -   What investment vehicles should you consider when investing the funds
        in your TFSA and/or RRSP?

    How is a TFSA different from an RRSP?

                  TFSA                                 RRSP

    -   With a TFSA, you do not need    -   With an RRSP, you must have
        to have any income to               income in order to accumulate
        accumulate the $5,000 per           contribution room
        year contribution room


    -   Withdrawals from a TFSA are     -   Withdrawals from an RRSP are
        tax-free. Any amount withdrawn      taxed in the year of withdrawal
        is then added to your               (with the exception of the Home
        contribution room in the            Buyer's Plan (HBP) and Lifelong
        following year, so that you         Learning Plan (LLP) which are not
        could later recontribute the        taxed provided they are repaid on
        amount that you withdrew.           schedule). Any amount withdrawn
                                            can not be added to your
                                            contribution room in the
                                            following year.


    -   Contributions to a TFSA are     -   Contributions to your RRSP are
        not tax-deductible on your          tax-deductible on your income tax
        income tax return.                  return


    -   There is no requirement to      -   An RRSP must be fully withdrawn
        convert the TFSA to an income       or be transferred to a RRIF or
        payment option (e.g. a RRIF or      annuity by the end of the year
        an annuity) at any age              you turn 71.



For further information: For further information: Kasia Lech, Toronto,, (416) 867-5394; Ronald Monet, Montreal,, (514) 877-1873

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