# 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 Canada gives you three main registered accounts for saving, and picking between them comes down to one question: when would you rather pay the tax? The RRSP lowers your tax now and taxes you later. The TFSA does the reverse. The FHSA is built for a first home and gets both breaks. ## What separates the main accounts? An RRSP contribution is a deduction, so it lowers this year's tax, and what you withdraw later is taxed as income. A TFSA contribution isn't deductible, but nothing you take out is taxed. Which one wins depends on whether your tax rate today is higher or lower than it will be when you spend the money. The CRA's [TFSA overview](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/tax-free-savings-account.html) covers the rules. Here's a rough picture. Sam in Calgary puts $5,000 into an RRSP and has a 30% marginal rate, so the deduction is worth about $1,500 at tax time (5,000 x 0.30). Put the same $5,000 in a TFSA and there's no refund, but every dollar that comes out later is yours. Deductible RRSP and PRPP contributions can be used to reduce your income tax. Line 20800 - RRSP deduction, [canada.ca](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-20800-rrsp-deduction.html) The [RRSP calculator](https://tax-services.ca/calculators/rrsp-retirement/rrsp-calculator) shows what a contribution saves you, and the [TFSA calculator](https://tax-services.ca/calculators/rrsp-retirement/tfsa-calculator) works out your room. ## What are the limits for 2026? The RRSP dollar limit is $33,810, and your own limit is 18% of last year's earned income up to that cap, plus unused room, minus any pension adjustment. The TFSA limit is $7,000 for the year. The FHSA allows $8,000 a year and $40,000 over its life, and unused room carries forward up to $8,000. The CRA explains how that works on its [FHSA page](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account.html). The [limits and rates page](https://tax-services.ca/tax-numbers) has every figure with its source. ## What happens when you take money out of an RRSP? The bank withholds tax on the spot, outside Quebec 10% on up to $5,000, 20% on the next $10,000 and 30% above $15,000. That's withholding, not your final bill. The whole amount is added to your income for the year, so you might owe more or get some back. Take out $12,000 and the bank holds back $1,900, yet your real tax could be higher or lower. The [RRSP withdrawal tax calculator](https://tax-services.ca/calculators/rrsp-retirement/rrsp-withdrawal-tax) estimates it. ## What changes at 71? You can contribute until December 31 of the year you turn 71. After that the RRSP has to be closed, turned into a RRIF that pays you a minimum each year, or used to buy an annuity. ## Where does your pension fit in? They sit next to your own savings. Canada Pension Plan payments depend on what you contributed while working, and Old Age Security depends on how long you've lived in Canada. The [CPP guide](https://tax-services.ca/cpp), the [CPP calculator](https://tax-services.ca/calculators/rrsp-retirement/cpp-calculator) and the [OAS calculator](https://tax-services.ca/calculators/rrsp-retirement/oas-calculator) cover each, and the [retirement calculator](https://tax-services.ca/calculators/rrsp-retirement/retirement-calculator) puts everything on one page. ## What do people get wrong? Treating the RRSP withholding as the final tax is the big one. Another is pulling RRSP money out in a high-income year when waiting would cost less. ## More about saving and retirement --- Source: https://tax-services.ca/guides/savings-and-retirement Last updated: 2026-10-07 Independent information site. Not affiliated with the CRA. No services, no guarantee of accuracy. See https://tax-services.ca/disclaimer