in Bank of Canada, Bank Rates, Nortel, Retirement Savings, TFSA

originally published on January 20, 2009 { 5 comments }

• TFSA Fees January 23, 2009, 1:52 PM

  Larry Macdonald (in Canadian Business online) made a link to our web page that shows all the fees associated to the TFSA at banks etc. Diana has just updated it, and there is even a chart that shows the TFSA incentives that are being offered….

  Reply
• sundae1888 January 20, 2009, 6:32 PM

  I haven’t opened my TFSA yet, but planning to do so with my tax refund (already maxed out my RRSP).

  I like TFSA and its reusable room. Retirement is a little too far off right now, I prefer the immediate tax refund of RRSP. I have also started out with RESP, so there are a lot of special savings vehicle to take care of.

  Reply
• Money Minder January 20, 2009, 9:23 AM

  RRSPs give Canadians the option to income split more than $5k per year(assuming you have a spouse, RRSP contribution space and income differential).

  If you have a great pension and retirement income and you anticipate that your tax rate in retirement will be just as high/higher than your pre-retirement tax rate, you will be heavily taxed on RRSP/RRIF withdrawals and TFSAs might be a better choice from that perspective.

  Reply
• Tax Admin January 20, 2009, 8:20 AM

  I’m glad to hear you made it through the Nortel crisis. Its a blessing you were let go when you were eh?

  When looking at the TFSA vs RRSP, consider this. The RRSP is a “retirement account” and you should consider it for your retirement plan. The TFSA is for everything else in your life: Saving for a new car, emergency fund, or a vacation. The TFSA gives you the flexibility to save for other things without tax implications.

  The theory underlying the RRSP is that you will be in a higher income bracket before retirement and a lower income after. You can lower your taxable income now and include this deferred income to a later point in life. You can also use the RRSP as an income averaging tool (contribute when income is high and draw it off when income is low – commission sales or self-employed persons benefit from this).

  That said, I feel that you first must consider your retirement and contribute to an RRSP to meet that need. Then you use the TFSA to save for other things. All said and done, it makes more sense to contribute to an RRSP first, particularly if your income if high.

  Reply
  • bigcajunman January 20, 2009, 8:58 AM

    It’s odd to say, but yes I was lucky I was laid off when I was, because I have too many friends who are in a bad situation right now.

    Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.