Neither RRSP nor TFSA withdrawals are always first. RRSP (and later RRIF) withdrawals create taxable income. TFSA withdrawals do not. The better order depends on your tax brackets, future RRIF minimums, OAS exposure, CPP timing, estate goals at a high level, and how much flexible contribution room you want to preserve. Many solid plans use a blend rather than a single-account rule.
Tax treatment at a glance
| RRSP / RRIF | TFSA | |
|---|---|---|
| Withdrawal taxed? | Yes, as income | No |
| Helps manage taxable income? | Can raise it | Usually does not |
| Future forced withdrawals? | RRIF minimums after conversion by age 71 | No minimum withdrawals |
| Contribution room after withdrawal | No room restored | Room restored the following year (TFSA rules) |
When drawing the RRSP first can be worth modelling
- You are in a relatively low tax bracket before CPP, OAS, or pension income begins
- You want to reduce the RRSP balance that will face RRIF minimums later
- You are bridging to a later CPP start and accept taxable income now for a larger CPP later
Those cases show up often in early retirement and in RRSP withdrawal strategy discussions. They still need a tax check. Filling lower brackets is useful; jumping into much higher brackets to "get ahead of the RRIF" can be counterproductive.
When drawing the TFSA first can be worth modelling
- You want to keep taxable income lower because of OAS recovery tax risk
- You expect higher tax rates soon and prefer to save RRSP room in the brackets for later flexibility
- You need spending money without pushing net income up in a sensitive year
In RetireIQ's 2026 tax-year configuration, the OAS recovery-tax threshold used for planning is $90,997. RetireIQ's active tax-year configuration uses this recovery-tax threshold for planning. Canada.ca publishes recovery thresholds by income year and payment period, which can differ. TFSA withdrawals do not add to that income measure the way RRSP withdrawals do.
CPP and the order of withdrawals
If CPP is delayed, something else funds spending. That something else might be TFSA cash (cleaner for taxable income) or RRSP cash (uses registered savings while income is still low). The CPP decision and the withdrawal decision belong in the same model. See When Should I Take CPP?
Estate considerations at a general level
At death, RRSP/RRIF values are generally included in income for the final return unless funds transfer to a surviving spouse or common-law partner on a rollover basis under the rules that apply. TFSA amounts can transfer to a spouse or common-law partner more tax-efficiently in many cases, subject to designation and CRA rules. This page is not estate advice. It is a reminder that account location can matter beyond your own retirement years, so some households prefer not to empty the TFSA first by default.
Blended strategies
A common practical approach is to fill a target taxable income band with RRSP/RRIF withdrawals, use TFSA or non-registered money for the rest, and revisit the mix when CPP or OAS begins. Another approach is TFSA-first for a few years, then larger RRSP draws once the rest of the income picture is clearer. The right blend is the one that keeps spending funded without creating avoidable tax or OAS pressure.
How to test this in RetireIQ
Enter both account types with realistic balances, set spending, and compare withdrawal sequences. Look at taxable income by year, OAS exposure, and portfolio longevity. If you are still sizing the overall plan, start from how much you may need or the retirement calculator.
Frequently asked questions
Should I always empty my TFSA last?
Not always. Keeping TFSA assets can help with tax control and flexibility, but some years are better funded from the TFSA so RRSP withdrawals do not spike taxable income.
Do TFSA withdrawals reduce OAS?
TFSA withdrawals are not taxable income, so they do not raise net income the way RRSP withdrawals do. OAS recovery tax is based on income, not on TFSA withdrawals themselves.
What about non-registered accounts?
Non-registered withdrawals can trigger capital gains and other taxable investment income. They often sit in the middle of a blended plan rather than as a simple first-or-last rule.
Does contribution room matter in retirement?
It can. TFSA room comes back the year after a withdrawal, which some retirees value for later flexible saving. RRSP room works differently and is usually less central once contributions have stopped.
Sources
Disclaimer. RetireIQ provides educational retirement planning tools and illustrative projections. Results depend on the assumptions and information entered and are not financial, investment, tax, or legal advice. Government benefits, tax rules, investment returns, and other assumptions can change. Consider obtaining professional advice for decisions specific to your circumstances.