Q – I am starting to wonder if RRSPs are the best vehicle for saving, when taxes are considered (when one withdraws the money and when one dies).

I know it depends on income but my question is: Is it better to contribute to an RRSP, take the tax deduction, pay income taxes on withdrawals when the RRSP is converted to a RRIF, pay income taxes on the balance when one dies, or is it better to use a non-registered account, pay taxes on income along the way, pay capital gains when one withdraws money, and pay capital gains on the balance when one dies? – Brent F.

A – I know a lot of people complain about the taxes they must pay when income is withdrawn from an RRSP or a RRIF so you aren't the first person to ask this question. The answer is that the RRSP is the most tax-efficient way to go.

If you read chapter six in my new book, The Ultimate TFSA Guide, you'll find a series of tables showing the after-tax return from an RRSP, a TFSA, and an unregistered account over 20 years. Using one set of assumptions, the RRSP is better. Using another set, the TFSA is best. There is no scenario in which the non-registered account wins, assuming the same rate of return in all cases. The reason is that the annual taxation of returns in the non-registered account slows down the whole growth process. – G.P.

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The foregoing is for general information purposes only and is the opinion of the writer. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice. However, please call the author to discuss your particular circumstances.