Canada RRSP vs TFSA Contribution Optimizer

Key calculation steps:

1. RRSP: you receive an immediate tax refund equal to contribution × current marginal tax rate. We assume you invest that refund together with the contribution. We compound the invested sum at the expected annual return for the specified number of years. On withdrawal we apply the estimated withdrawal marginal tax rate to the full future value to obtain an after‑tax amount.

2. TFSA: contribution is invested without an immediate tax refund, compounds at the expected annual return, and withdrawals are tax‑free.

Assumptions and limitations:

• The tool assumes a lump‑sum contribution and a single withdrawal event at the end of the horizon. Different contribution schedules, phased withdrawals, or variable returns will change outcomes.

• Marginal tax rates should reflect combined federal and provincial rates. The tool uses the user‑supplied rates rather than automatically deriving provincial brackets.

• This model does not include interaction with other benefits, OAS/GIS clawbacks, pension income splitting, or RRSP contribution room limits. It also does not model withholding taxes on non‑registered investments or other tax credits.

• Use conservative estimates for expected return and consult a tax professional for decisions involving complex tax situations.

This tool estimates the after‑tax future value of a single contribution to an RRSP versus a TFSA given user inputs and assumptions.

It is intended to help you explore scenarios; confirm limits and seek professional advice for decisions affecting your taxes or retirement income.