| The TFSA vs. the US Roth IRA | | | | Investment Rules |
| Many Canadians are interested to learn how the new | | | | Investors have the option to invest into virtually any |
| TFSA account compares to similar accounts within | | | | investment type within both accounts; securities, mutual |
| other countries. As the neighbouring country of | | | | funds, individual bonds, cash, and real estate. |
| Canada is the US, many Canadians wonder how their | | | | Withdrawal Rules |
| new tax free account compares to the US equivalent, | | | | Funds within a TFSA can be withdrawn from any |
| the Roth IRA. | | | | account and for any reason. This greatly differs from |
| Eligibility to Contribute | | | | the Roth IRA. Withdrawals from the Roth IRA will be |
| Individuals are eligible to contribute into the TFSA if | | | | penalized financially if they are prior to the age of 59 |
| they are Canadian citizens who are over the age of | | | | ½, are not for a first home purchase or are not |
| 18. Both account types must be held individually, | | | | taken out due to a qualified disability within the |
| meaning that joint accounts are not available as | | | | household. Therefore, the withdrawal ability from a |
| TFSAs or Roth IRAs. | | | | TFSA is significantly greater than that of a Roth IRA |
| Annual Contribution Amounts | | | | account. |
| For 2009, the annual contribution limit per person into | | | | Re-contribution Rules |
| the TFSA is $5,000. This amount is set to increase on | | | | If an investor is unable to make the maximum |
| an annual basis. For 2008, the maximum annual | | | | contribution into a TFSA during a given tax year, they |
| contribution for those that are eligible in the US for the | | | | can make up the amount in a future tax year. This |
| Roth IRA is $5,000. Individuals over the age of 50 who | | | | option allows investors to maximize the tax free |
| are eligible for the Roth IRA can save $6,000 per year | | | | benefit of the account on an ongoing basis, particularly |
| into the Roth IRA account. | | | | during times that may be more economically |
| Contributions to either the Roth IRA or the TFSA are | | | | challenging. This option is not available for the Roth IRA. |
| not tax deductible. | | | | Contributions into the Roth IRA must be made for the |
| Income Requirements | | | | given tax year by the federal income tax filing date of |
| There are not currently income requirements for | | | | April 15th. If the individual is unable to meet the |
| Canadians to be eligible to save into a TFSA account. | | | | maximum savings amount for a given tax year, they |
| However, Americans who wish to utilize the Roth IRA | | | | cannot re-contribute that amount during a later tax |
| as an investment vehicle must show current income | | | | year. |
| for the tax year that they save into the account and | | | | Tax Treatment Overall |
| there are income restrictions on the amount of money | | | | Investments made into both accounts are done so on |
| that someone can make in a given tax year to be | | | | an after tax basis. Investment growth within the TFSA |
| eligible for the Roth IRA account. Single individuals can | | | | account is tax deferred and the withdrawals from |
| make no more than $159,000 AGI and married couples | | | | both accounts are income tax free as long as they |
| cannot make more than $159,000 AGI to be eligible to | | | | meet the account guidelines. |
| contribute into the Roth IRA account. | | | | |