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TORONTO, ONTARIO--(Marketwire - Jan. 16, 2013) - With the annual deadline for contributing to a Registered Retirement Savings Plan (RRSP) fast approaching, many Canadians are wondering whether they should invest solely in an RRSP or split their investment dollars between an RRSP and a Tax-Free Savings Account (TFSA). While the two investment vehicles complement each other and boast impressive adoption rates among Canadians, a BMO study has found that many are intrigued by the TFSA, in particular.

According to the national study:

• Two-thirds (67 per cent) of Canadians have an RRSP and 39 per cent have a TFSA.
• If they were given a limited amount of money to invest, 42 per cent of Canadians would invest the funds in a TFSA while 37 per cent would put it towards a RRSP.
• The most attractive TFSA benefits cited were that investments are tax-free (36 per cent) and that funds can be withdrawn at any time (20 per cent).

"Whether saving for travel, the purchase of a home, a child's education or retirement, it's encouraging to see that Canadians are investing in their future by contributing to TFSAs and RRSPs," said Serge Pépin, Vice President, Investment Strategy, BMO Asset Management Inc. "Both programs play important roles in helping Canadians save and invest in a tax-efficient manner. They complement each other and should be used in unison, so it's important that investors understand their differences."

Mr. Pépin noted that a TFSA allows Canadians to easily earn tax-free investment income to meet their savings needs. Key benefits of this registered plan include:

• No minimum contribution required to open an account
• Investors pay no income tax on investment returns earned in the account
• There are no taxes on funds that are withdrawn
• TFSAs can hold a wide range of investments
• The federal government recently raised the annual contribution limit for a TFSA from $5,000 to $5,500

An RRSP, on the other hand, is a tax-deferred savings vehicle that is designed specifically to help Canadians save for their retirement. An RRSP is also a wise investment tool because:

• Investment growth is tax-free until withdrawn, meaning retirement wealth has the potential to grow faster than if invested outside an RRSP
• Contributions to an RRSP are typically tax deductible, lowering annual taxable income and income taxes payable
• RRSPs can hold a wide range of qualified investments
• Funds can easily transition to retirement income
• Spouses can split income to reduce their combined taxes payable

"Ideally, Canadians should be contributing to both a TFSA and an RRSP because they each offer distinct advantages," added Mr. Pépin.

BMO offers Canadians special, limited time TFSA and RRSP promotions

To encourage Canadians to boost their savings and invest for their future, BMO has introduced special offers on TFSA Savings Account deposits and RRSP contributions:

• Until April 30^th, 2013, BMO is offering a 2.25 per cent interest rate on net new deposits to a BMO TFSA Savings Account - the highest rate currently offered by a major financial institution in Canada.
  
  
• Until March 1^st, 2013, if you set up and maintain a new RRSP continuous savings plan in your BMO mutual funds account for 12 months, you will receive a one-time 15 per cent bonus on your first month's contribution (up to a maximum of $150).
  
  

For more information on the TFSA, please visit: www.bmo.com/TFSA.

For more information on the RRSP, please visit: www.bmo.com/Retirement.

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The Pollara online survey was completed between October 11 and October 16, 2012, with a sample of 1,000 Canadians. A probability sample of this size would yield results accurate to ± 3.1 per cent, 19 times out of 20.

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