Which of the following is true when comparing RRSPs and TFSAs?
A)An RRSP is generally considered to be a more flexible account than a TFSA.
B)A TFSA is generally considered to be a more flexible account than an RRSP.
C)TFSAs should be used primarily for short and long term saving needs instead of long term retirement savings.
D)RRSPs should be used primarily for short and long term saving needs instead of long term retirement savings.

Question

Quizplus · Accepted Answer

A TFSA is generally considered to be a more flexible account than an RRSP because withdrawals from a TFSA are tax-free and do not count as income, whereas withdrawals from an RRSP are taxable as income. Additionally, TFSA contributions can be withdrawn at any time without penalty or affecting contribution room, while RRSP withdrawals before retirement age are subject to withholding tax and can result in a permanent loss of contribution room. However, both RRSPs and TFSAs can be used for long term retirement savings, depending on individual financial goals and strategies.

Which of the Following Is True When Comparing RRSPs and TFSAs