Conversation transcript

What is the difference between a TFSA and a Roth IRA?

Just so you know, anything you share here is kept private and secure. Great question. Both accounts let your investments grow and be withdrawn tax-free, but they belong to two different countries' tax systems. A TFSA is a Canadian account where you contribute after-tax dollars, and everything inside grows and comes out completely tax-free. A Roth IRA is the American equivalent, also funded with after-tax dollars, with tax-free growth and withdrawals in retirement. The key differences come down to rules and restrictions. The Roth IRA has income limits that can prevent higher earners from contributing directly, and it has specific rules around when you can withdraw earnings penalty-free. The TFSA has no income limits at all, and withdrawals are more flexible since you get that room back the following year. Are you based in Canada or the US? That would help me point you toward whichever account is actually available to you.