Enter Your Details
After-Tax Value Comparison
| Period | TFSA | RA (at retirement) | Taxable Account |
|---|---|---|---|
| Click Compare | |||
⚠️ RA value shown as gross (pre-tax) accumulated value. Actual after-tax value depends on annuity structure and income tax at withdrawal. TFSA value is fully tax-free. Taxable account assumes dividends tax on 3% dividend yield.
Open a TFSA and RA with Easy Equities
Invest in both a Tax-Free Savings Account and Retirement Annuity on one platform — from R1.
RA vs TFSA vs Taxable — The Key Differences
South African investors have three main account types for long-term investing, each with different tax treatment:
Retirement Annuity (RA): Tax deduction upfront (up to 27.5% of income, max R350,000/year). Growth tax-free inside the RA. No access before age 55. At retirement, one-third can be taken as a lump sum (potentially tax-free up to the threshold); the rest must fund an annuity. Best for: high earners wanting maximum tax relief who do not need access before 55.
Tax-Free Savings Account (TFSA): No upfront deduction. All growth, dividends, and withdrawals are completely tax-free. Annual limit R36,000, lifetime limit R500,000. Access at any time. Best for: FIRE investors who may retire before 55 and need flexible access to funds.
Taxable Account (Unit Trust / Direct Equities): No tax benefits. Dividends taxed at 20% withholding. Capital gains tax on disposal (40% inclusion rate × marginal rate). Fully flexible. Best for: investments beyond RA and TFSA limits, or where flexibility is paramount.
The Optimal SA FIRE Strategy
Most SA FIRE practitioners follow this order: 1) Maximise TFSA first (R3,000/month) for flexibility; 2) Contribute to RA for tax relief, but be mindful of the age-55 restriction; 3) Any additional savings go into a taxable account. This balances tax efficiency with the flexibility needed for early retirement.
Frequently Asked Questions
Generally no — most RAs are locked until retirement age (minimum 55). However, certain circumstances (disability, emigration) may allow earlier access. This lockup is the main drawback of RAs for very early FIRE — which is why TFSA flexibility is so valuable.
Your RA forms part of your estate. The trustees of the fund have discretion over distribution but must consider your nominated beneficiaries. Ensure your RA beneficiary nomination is up to date.
No limit — you can invest as much as you want in a taxable unit trust or share account. The downside is paying tax on dividends and capital gains. The upside is full flexibility and no contribution limits.