Comparing TFSAs, RRSPs and Savings for Medical Professionals

Meagan Sweeney
Oct. 26, 2022
3-minute read

This article was originally published by RBC Healthcare

There are a number of options when it comes to saving for the future. Some are more tax-efficient, while others provide more flexibility. We compare 3 savings vehicles common for physicians and medical professionals — TFSA, RRSPs and Savings Accounts.

When examining your saving choices, it’s important to note there is no single or absolute answer that fits everyone’s situation. Instead, there are many considerations that may make a particular savings vehicle (or a combination of several vehicles) more suitable for you. In making a decision about where to save, remember to give some thought to your personal goals and objectives.

We've broken down the 3 most common saving vehicles into:

  • The Basics
  • What Happens with Taxes
  • Contribution Must-Knows
  • Withdrawal Usage

The Basics

TFSARRSPSavings Account
What is it?A registered investment plan where your investment earnings and withdrawals are tax-free.A registered investment plan where your investment earnings are tax-deferred and your contributions are tax-deductible.An account with interest paid on every dollar, calculated daily and paid monthly.
How can I use it?Save for anything you want — short or long-term goalsSave for retirementSave for anything you want
Who owns the account?Individual onlyIndividual only 
(Learn about Spousal RRSPs)
Individual or joint

Tax Treatment

TFSARRSPSavings Account
Tax-deductible contributions?NoYesNo
Savings grow tax-free or tax-deferred?Tax-free (never taxed)Tax-deferred (taxed upon withdrawal)The interest you earn is taxable
Taxed withdrawals?Tax-free (never taxed)Taxed (added to taxable income the year the money is withdrawn)No

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TFSARRSPSavings Account
Annual contribution limits?$6,000 for 2022 (subject to change) plus previous years’ unused contribution room18% of the previous year’s earned income, less any pension adjustment, up to the maximum annual contribution limitNo limit
Over-contribution penalty tax?Yes, 1% per month on excess contributionsYes, 1% per month on excess contributions if you exceed the $2,000 lifetime over-contribution amountNo
Carry-forward of unused contribution room?Yes, indefinitelyYes, until the year you turn 71Not applicable/no limit
Need earned income to contribute?NoYesNo
Ability to contribute after age 71?YesNo, must convert to an RRIF or annuity by the end of the year you turn 71, or close the planYes


TFSARRSPSavings Account
Withdraw savings for any reason?Yes, although timing depends on your investmentsYes, but taxes are withheld at the time of withdrawal (unless participating in the Home Buyer’s Plan or Lifelong Learning Plan)Yes, at any time
Withdrawals affect contribution room?Yes, withdrawal amounts are added to the contribution room the following yearNo, contributions are based on the previous year’s earned incomeNo
Withdrawals affect government benefits?NoYesNo

There isn’t a one-size-fits-all answer in deciding how you want to save. It’s a personal decision you should make based on your goals, circumstances, tax rates and personal habits. Learning more about these types of accounts can set you on a better path to improving your overall financial knowledge and management skills.

If you need help with the decision-making process, speak to a dedicated RBC Healthcare Specialist, who can help you examine your options.

Meagan Sweeney
Meagan is a Senior Marketing Manager at Dr.Bill. She has a strong passion for content and communications. A University of Toronto and Durham College grad, she’s specialized in Digital Marketing, SEO, and Public Relations. You'll likely find her on the trails with her dog Luna, on the streets looking for the next local bite, or tucked away with a good book for the day.
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This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.

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