Neyos Financials
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Neyos Financials
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Plan

TFSA, RRSP, RESP and FHSA, in the right order

Each account has a job. We help you decide which to use first, how much to put in, and how they fit your wider plan.

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Is this for you?

  • You're saving for a first home
  • You have children and want to use the RESP grants
  • You're unsure whether a TFSA or an RRSP comes first
  • You're worried about going over your contribution limits

What registered accounts are

Registered accounts are savings and investment accounts that the federal government gives special tax treatment. Each one is designed for a different purpose, and each has its own contribution rules.

  • Tax-Free Savings Account (TFSA): contributions are not deductible, but growth and withdrawals are tax-free. Withdrawals are added back to your room the following year.
  • Registered Retirement Savings Plan (RRSP): contributions are deductible, growth is tax-deferred, and withdrawals are taxed as income.
  • First Home Savings Account (FHSA): for first-time home buyers. Contributions are deductible, up to $8,000 a year and $40,000 over your lifetime, and qualifying withdrawals for a first home are tax-free.
  • Registered Education Savings Plan (RESP): saves for a child’s post-secondary education and can attract the federal Canada Education Savings Grant on contributions.

Who it can help

Almost everyone in Canada can benefit from registered accounts, but the right order differs. A new graduate saving for a home, a family with young children and someone ten years from retirement will usually make different choices.

Questions it helps answer

  • Which account should I fund first, and how much should go into each?
  • How do I use an FHSA and RRSP together for a first home?
  • How do I make the most of education grants through an RESP?
  • What happens if I have contributed too much?

What to consider

Contribution room, your current and future tax rate, and when you will need the money are the main factors. Over-contributing to a TFSA, RRSP or FHSA can lead to a monthly tax on the excess, so it is worth confirming your room with the CRA before you contribute. Annual limits change, so we always check the current figures with the CRA.

Limits and risks

Registered accounts are containers, not investments. The tax benefits do not protect you from investment losses, and each account has withdrawal rules that can create tax if they are not followed. We explain the rules, but we do not give tax advice; for complex tax situations we will suggest involving an accountant.

How Neyos helps

We look at your goals, tax position and timeline together and recommend an order and amount for each account. You get a written summary of the reasoning, and help setting up the agreed contributions.

Common questions

Should my next dollar go into a TFSA or an RRSP?

It usually depends on your tax rate now compared with your expected rate when you withdraw, and on when you might need the money. Our insight article walks through the trade-off.

Can I have an FHSA and still use the RRSP Home Buyers' Plan?

Yes. Eligible first-time buyers can use both towards the same home, subject to the rules of each program.

Where can I check my contribution room?

Your TFSA, RRSP and FHSA room is shown in your CRA My Account and on your notice of assessment.

Talk it through with an advisor.

We’ll start with your situation and tell you plainly what, if anything, you need.

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This page is general information, not advice for your situation. Speak with a qualified professional before acting on it.