Updated Checked by the Tax-Services.ca editorial team How we check
There’s no Roth IRA in Canada. That’s a US account, and its yearly limits and income phase-outs are set by the IRS, which we didn’t check for this page. The Canadian account that works most like it is the TFSA, and for 2026 you can put in $7,000 (plus any room you haven’t used since 2009). The CRA prints both the TFSA and RRSP dollar limits in its table of registered plan limits.
What’s the Canadian version of a Roth IRA?
The TFSA. You put in money you’ve already paid tax on, the income it earns is tax-free, and so are withdrawals. That’s how the CRA describes it. Contributions aren’t deductible, which is the same trade a Roth makes: no break now, no tax later.
The RRSP is the other half of the picture. Think of the US traditional account: you deduct what goes in and pay tax on what comes out. Most people end up using both, and the useful question is which one gets the next dollar.
| 2026 figure | TFSA | RRSP |
|---|---|---|
| Yearly limit | $7,000 | Last year’s earned income times 18%, capped at $33,810 |
| Tax break on the way in | None | Deduction from income |
| Withdrawals | Tax-free | Taxed as income |
| Room after a withdrawal | Returns the following January | Check the CRA page |
| Cost of going over | 1% a month on the excess | 1% a month on the excess |
How much TFSA room do you have?
Your room is set by when you turned 18 and the years you lived in Canada. Room starts building the year you turn 18. Add up the yearly limits from 2009 to 2026 and the total is $109,000, so a resident who has been eligible the whole time and never touched the account has $109,000 of room this year.
Nobody is that tidy. Say you put in $30,000 over the years and took out $5,000. Our TFSA calculator gives you $84,000 of room for 2026. That’s $109,000 minus $30,000, and the $5,000 you withdrew returns to your room in January.
The calculator only knows what you tell it. The number that counts is on your CRA My Account or your notice of assessment, so look there before a big deposit.
Where does the RRSP fit?
If your income is high enough that a deduction is worth a lot, the RRSP can beat a Roth-style account. Take someone in Ontario with $80,000 of earned income who puts $10,000 into an RRSP. The RRSP calculator shows $3,115 of tax saved, so the real cost of the contribution is $6,885. Their room is $14,400 (that’s 18% of $80,000), so it fits.
The catch is that withdrawals are taxed later. If your rate in retirement is lower than today’s, you come out ahead. If it isn’t, the saving was a deferral. You can test that with the retirement income tax calculator.
You can still add to an RRSP for a given tax year during the first 60 days after it ends. We haven’t read the 2026 tax year cut-off on a CRA page yet, so check the date before you count on it.
Which one should get your next dollar?
Picture Mia in Winnipeg, who has $5,000 saved and a good year behind her. If she expects her income to fall later, say in retirement, the RRSP deduction may be worth more to her than tax-free growth. If she expects to earn more later, or wants money she can pull out without a tax bill, the TFSA looks better. If she can’t decide, splitting it is not a bad answer, and neither account locks you in for life.
The same logic applies to the Roth question. A Roth’s pitch is “pay tax now, never again”, and that’s the TFSA’s pitch too. The difference is that a TFSA has no income phase-out, so a high earner can still use it. We haven’t checked whether Roth rules limit the same people, which is why we won’t compare them dollar for dollar.
What if you already hold a Roth IRA and live in Canada?
That’s a cross-border question, and we haven’t researched how the CRA treats a US account. Don’t assume it’s tax-free here just because it is there. Ask someone who works with both tax systems, and ask before you contribute again or withdraw anything.
Mistakes that cost money
Going over your TFSA room is the classic one. Every month the excess sits there it’s taxed at 1%, and the CRA’s advice is to pull it out quickly and not wait to be told.
The second is thinking a withdrawal frees up room right away. It doesn’t. Take out $5,000 in March and you can’t put it back until the next January without risking a penalty. The third is mixing up the two accounts because a bank teller said “savings account” and you nodded. Ask which one it is. And keep your own record of contributions and withdrawals, because a few bucks of lost track becomes a real penalty when the excess sits for months.
And if you’d like to see how a steady $7,000 a year grows, the TFSA calculator puts $7,000 a year for 20 years at $239,770, of which $99,770 is growth. That uses the calculator’s default return, so change it to a number you believe. The RRSP calculator covers the other account, and the FHSA calculator covers a third one if a first home is on your list.
What this page is based on
TFSA and RRSP limits are from the Canada Revenue Agency‘s contribution pages and its table of limits, read in September 2026. The $109,000 total is our own sum of the yearly limits, not a figure the CRA prints. We haven’t checked IRS rules, so we give no Roth IRA dollar limits. If you need them, go to irs.gov.
Frequently asked questions
Can I open a Roth IRA if I live in Canada?
That is a cross-border question we did not check on an official page. Roth IRAs follow IRS rules, so start with the IRS and your own tax situation.
What is the TFSA limit for 2026?
$7,000. Unused room from earlier years adds to it, and room counts from the year you turn 18.
Are TFSA withdrawals taxed?
No. The CRA says income and withdrawals are tax-free, and the amount you take out is added back to your room the next calendar year.
What happens if I put too much in a TFSA?
The excess is taxed at 1% a month while it stays in the account.
Where do I find my real room?
In CRA My Account, or on your notice of assessment. Our calculator is an estimate from what you enter.
All rrsp and retirement calculators
- RRSP, TFSA, FHSA and retirement income in Canada
How the RRSP, TFSA and FHSA differ, the 2026 limits, what happens when you withdraw, and where CPP and OAS fit into your retirement income