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RRSP-TFSA Doubleheader



Everyone’s time is so precious; why not optimize your time with clients by helping with their RRSPs and TFSAs at the same time? I understand that many clients can’t do both but there’s no harm in asking. Ask to see a client’s 2016 Notice of Assessment for their RRSP room and ask about their TFSA contributions to date. Each person now has $57,500 in lifetime contribution room. For a couple, that’s $115,000. You can transfer money from another company’s TFSA using the same form you use for transferring RRSPs. Perhaps establish a PAC for the TFSA, $5,500 / 12 = $458 per month. As a refresher, Tax Free Savings Accounts are an important part of everyone’s financial plan. I’ve always thought of them as an RRSP turned upside down. Unlike an RRSP, there is no tax deduction for deposits but withdrawals are tax free. In addition, there is no maximum age for deposits; withdrawals do not affect income tested benefits such as OAS; withdrawals (including growth) can be re-deposited in the following calendar year without reducing contribution room; and all Canadian residents get the contribution room automatically. Contrasting this with RRSPs, deposits end at age 71; RRSP withdrawals are treated as income and affect income tested benefits; RRSP withdrawals can only be re-deposited if RRSP room exists or is created and; RRSP contribution room is only created when there is earned income (and the room is reduced by pension plan contributions). Lastly, some GMWBs are available as a TFSA. Imagine telling a client they can have tax-free guaranteed income for life, wow! Take care, Scott Edgington Director of Wealth Qualified Financial Services Scott.edgington@qfscanada.com 416-786-4140


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