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Do you know your TFSA from your RRSP? While both savings vehicles can help Canadians build wealth and plan for retirement, there are numerous differences in how they are structured. Here, the Financial Post explains how each account works, who is eligible and how you can use them to save for the future.

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Who is eligible to contribute?

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Registered retirement savings plans (RRSPs) are open to any Canadian resident with a valid social insurance number, provided you have started earning employment or business income.

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While you can start at any age, you can only contribute until Dec. 31 of the year you turn 71, at which point the RRSP must either be converted to a registered retirement income fund (RRIF) or another income option (such as an annuity or taken out as a lump sum).

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To start a tax free savings account (TFSA), you must be at least 18 years old or the age of majority in your province. You must be a resident of Canada with a valid social insurance number, although non-residents with a valid SIN can also contribute (but will pay one per cent tax for each month the contribution remains in the account).

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There is no upper age limit at which you must stop contributing to a TFSA.

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How much can you contribute?

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The annual contribution limit for an RRSP depends upon your income in the preceding year. For 2026, the maximum amount is whichever is lower: 18 per cent of your earned income from 2025 or $33,810.

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Unused contribution room carries over as well — younger Canadians may accumulate a significant amount of unused room in the early stages of their careers, which then can be tapped later when they are in higher income brackets.

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If you are part of a company pension plan, your contribution and carryover room will be reduced by a pension adjustment (PA) for the previous year. The PA is calculated by your employer and is the value of the benefits you earned in the preceding year under your employer’s registered pension plans (RPP) and deferred profit sharing plans (DPSP).

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Note that some employers offer company-sponsored plans or group RRSPs and may match contributions, which also count toward your contribution limit.

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For a TFSA, the maximum amount you can contribute depends on the current year’s dollar limit and your personal TFSA contribution room.

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The limit for 2026 is $7,000, bringing the cumulative lifetime contribution limit to $109,000 since the TFSA was launched in 2009.

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If you have made a withdrawal in the past, that amount will be added to your contribution room, but not until the following calendar year.

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You can contribute to your TFSA at any point during the year, but the RRSP deadline for contributions to count toward the previous year’s tax deductions is 60 days past Dec. 31. The deadline for your 2025 tax return is Mar. 2, 2026.