The Canadian equivalent of a Roth IRA

If you arrived here searching for an IRA, a Roth IRA or a 401(k) and you live in Canada, the question underneath is almost always the same one: what is the Canadian version of this?

The shapes map cleanly. The rules do not. Below is the mapping, and then the places where relying on the analogy will cost you something.

The map, at a glance

US account	Closest Canadian account	What makes them alike
Roth IRA	TFSA	After-tax money in, qualified growth and withdrawals not taxed
Traditional IRA	RRSP	Contribution may be deducted now, withdrawals taxed as income
401(k)	Group RRSP	Employer sponsored, payroll funded, often matched
529 plan	RESP	Education savings, sheltered growth, paid out to a student
HSA	No equivalent	Canada has nothing that shelters medical spending this way
Taxable brokerage	Non-registered account	No limit, no shelter, gains taxed when realised

These are analogies about tax treatment, not statements that one can stand in for the other. You cannot hold the US account because you live here, and the limits, withdrawal rules and reporting differ in every row. Canadian registered accounts explained owns the Canadian numbers, and US investing accounts explained owns the American ones.

Roth IRA and TFSA: the closest pair, and where it breaks

This is the mapping people arrive with, and it is the most accurate one on the list. Both are funded with money you have already paid tax on, both let growth compound untaxed, and both allow qualified withdrawals with no tax due.

Three differences matter more than the similarity:

The TFSA has no earned-income requirement. Roth IRA contributions require earned income and phase out at higher incomes. TFSA room accrues on residency and age, whether or not you worked that year.
Withdrawing behaves differently. Money taken out of a TFSA is added back to your room the following calendar year, which has no Roth equivalent. It is also the rule people break by re-contributing in the same year.
There is no five-year clock and no early-withdrawal penalty on a TFSA. A Roth IRA's earnings generally require both age and an account open five years before they come out cleanly.

So the TFSA is the more flexible of the two, and that flexibility is where the mistakes happen rather than where the tax does.

Traditional IRA, 401(k) and the RRSP

The RRSP carries both American shapes, which is why the mapping feels loose.

A traditional IRA is the individual version: you open it yourself, the contribution may reduce this year's income, and the withdrawal is taxed as income later. That is the RRSP in one sentence.

A 401(k) is the workplace version, and its Canadian analogue is a group RRSP, sometimes alongside a defined contribution pension plan. Payroll funded, frequently matched, and the match is the part worth not leaving behind in either country.

The practical difference is room. US retirement limits are separate per plan type, so a 401(k) and an IRA do not consume each other. RRSP room is one number, and an employer's contributions to a group plan consume it through a pension adjustment. Contribution room, explained covers how that number is actually built.

The 529 and the RESP

Both shelter growth for education and both are funded with after-tax money. The RESP has something the 529 does not: a federal grant that matches a percentage of what you contribute, up to annual and lifetime caps. That grant is usually the largest single reason to open one, and it is the part a US-shaped mental model leaves out entirely.

The HSA has no Canadian equivalent

The US health savings account is sheltered at contribution, at growth and at withdrawal for medical costs. Nothing available to a Canadian individual does that. The arrangement sometimes called a health spending account here is an employer or incorporated-business benefit plan, not a personal investment account whose growth compounds untaxed, so treating it as an HSA will mislead you about both the tax and the investing.

What the treaty recognises, and what it does not

This is the difference that changes where a holding belongs rather than just what it is called.

An RRSP or RRIF is generally recognised under the Canada-US treaty. A TFSA is not. The consequence shows up when you hold US dividend payers: the RRSP is generally spared US withholding on them and the TFSA gets no such relief, so two accounts that both look tax-free from here are not equally tax-free on what they hold. Asset location across accounts works through what that does to a decision, and US covered call ETFs for Canadians covers the same mechanic on a fund.

⚠️ If you are a US citizen or green card holder living in Canada, this page does not answer your question. That situation carries reporting obligations and fund-classification issues that turn on facts about you, and it is genuinely one to take to a cross-border professional rather than to a mapping table.

Cost base is calculated differently on each side

Worth knowing before you carry an American habit into a Canadian account.

The US tracks basis per account, and lets you identify specific lots when you sell. Canada pools identical property across every account you hold and requires a weighted average, so you cannot choose which shares you sold.

If you hold securities on both sides of the border, those are two different calculations rather than one with a currency conversion in the middle. Adjusted cost base explained covers the Canadian rule, and the pooling is the part that surprises people who learned the American one first.

If you hold accounts in both countries

Luum is Canada-first and US account support ships shortly after the Canadian launch. The account types, USD as a base currency and the reporting export are built; what is not yet open is connecting a US brokerage to a live account. Until then a holdings upload covers a US account, and every plan takes one.

This page is educational and is not tax advice. Which account you are eligible for follows where you are resident and taxed, and cross-border situations depend on facts this page cannot know. Confirm anything here with a qualified cross-border tax professional before acting on it.

Common questions

What is the Canadian equivalent of a Roth IRA?

The TFSA is the closest match. Both are funded with money you have already paid tax on, both let the growth compound untaxed, and both allow qualified withdrawals without tax. The TFSA is the more flexible of the two: it has no earned-income requirement, no five-year clock, no early-withdrawal penalty, and money withdrawn is added back to your room the following calendar year. The United States does not recognise a TFSA as a retirement account the way the treaty recognises an RRSP, which matters if you hold US dividend payers in it.

What is an IRA in Canada?

There is no IRA in Canada, and the account that does the same job is the RRSP. A traditional IRA and an RRSP share the shape that matters: the contribution may reduce your income in the year you make it, the investments grow tax-deferred, and the withdrawal is taxed as ordinary income later. If the American account you are thinking of is a workplace 401(k) rather than an individual IRA, the Canadian analogue is a group RRSP.

Can a Canadian open a Roth IRA or a 401(k)?

Eligibility follows where you are resident and taxed rather than which account you would prefer, so living and working in Canada generally means neither is open to you. If you previously worked in the United States you may already hold one, and what to do with an existing account is a cross-border question with tax consequences on both sides. That is a conversation for a professional rather than a mapping table.

Is a TFSA the same as a Roth IRA for US tax purposes?

No, and this is the difference that catches people. The Canada-US treaty generally recognises an RRSP or RRIF, and it does not recognise a TFSA the same way. The visible consequence for a Canadian investor is on US holdings: an RRSP is generally spared US withholding on US dividend payers and a TFSA is not. If you are a US citizen or green card holder living in Canada, there is a further set of reporting questions that depends on your own circumstances.

What is the Canadian equivalent of a 529 plan?

The RESP. Both are funded with after-tax money, both shelter the growth, and both pay out to a student. The RESP adds something the 529 has no equivalent for: a federal grant that matches a percentage of your contributions up to annual and lifetime caps, which is usually the strongest reason to open one rather than saving for education in a regular account.