- Rabbids Amusement Centre...
- Maximizing Children’s Po...
- Special Needs Camp: A Fu...
- ANNUAL TEACHER APPRECIATION CONTEST
- ARTS & CULTURE
- CHARITY FUNDRAISING
- COMMUNITY CONNECTIONS
- COVER STORY
- DINA DIMITRATOS
- EMPLOYMENT & ENTREPRENEURSHIP
- FÊTE DE LA FAMILLE
- FÊTE DU QUARTIER SAINT-BRUNO
- FESTIVAL LAVAL LAUGHS
- FÊTE DE QUARTIER VAL-DES-BRISES
- HEALTH & WELL-BEING
- 30 MINUTE HIT
- CHILDREN`S HEALTH & WELLNESS
- CLOSE AID
- DENTAL WELLNESS
- EXTREME EVOLUTION SPORTS CENTRE
- FONDATION CITÉ DE LA SANTÉ
- HEARING HEALTH
- MESSAGES FROM THE HEALTH AGENCY OF CANADA
- MENTAL HEALTH
- SOCIAL INTEGRATION
- SPECIAL NEEDS
- THE NUTRITION CORNER
- THE NUTRITION CORNER - RECIPES
- VACATION DESTINATION
- WOMEN'S FITNESS
- WOMEN'S HEALTH
- HILTON MONTREAL/LAVAL
- HOME & GARDEN
- INTERNATIONAL WOMEN'S DAY
- JAGUAR LAVAL
- LAVAL À VÉLO
- LAVAL FAMILIES TV SHOW
- LAVAL FAMILIES MAGAZINE CARES
- LAVAL URBAN IN NATURE
- LE PARCOURS DES HÉROS
- LES PETITS GOURMETS DANS MA COUR
- LEON'S FURNITURE
- LEONARDO DA VINCI CENTRE
- LFM PREMIERES
- LIFE BALANCE
- MISS EDGAR'S AND MISS CRAMP'S SCHOOL
- MISSING CHILDREN'S NETWORK
- NORTH STAR ACADEMY LAVAL
- PASSION SOCCER
- PARC DE LA RIVIÈRE-DES-MILLE-ÎLES
- PÂTISSERIE ST-MARTIN
- PIZZERIA LÌOLÀ
- PLACE BELL
- PORTRAITS OF YOUR MNA'S
- ROCKET DE LAVAL
- SACRED HEART SCHOOL
- SHERATON LAVAL HOTEL
- STATION 55
- SUBARU DE LAVAL
- TODAY`S LAURENTIANS AND LANAUDIÈRE
- TODAY`S LAVAL
- WARNER MUSIC
- THIS ISSUE
- MOST RECENT
RRSP or TFSA? That is the question!
since the tax-free savings account (TFSA) came on the scene in January 2009, some
investors have been faced with a new dilemma: is this new type of tax-efficient
plan better than an RRSP when it comes to saving for retirement? Two important
factors that should influence your decision are why you’re saving and what your
tax rate is.
“The TFSA is a savings account to be used for various projects. Its main advantage is that investment income earned in the TFSA account is not taxable, even when it’s withdrawn. Because it allows you to access the funds at any time without triggering a tax effect,* the TFSA is useful for both short- and long-term projects. Moreover, by consulting the MyIdea tool, available at nbc.ca, you can find out how much you should be saving periodically in order to accumulate the funds you need to carry out your plans,” says Martin Pouliot, branch manager in Laval.
“The RRSP is primarily intended for long-term projects, especially retirement.1 The returns generated are tax-sheltered until they are withdrawn. In other words, taxation is deferred. Unlike the TFSA, contributions made to an RRSP are deductible from taxable income. So the RRSP is beneficial if the tax rate on withdrawals from the account is lower than the deduction rate when you contribute. RRSPs are therefore favourable for most people, since their income after retirement is usually lower than during their active professional life,” says Christian Gelinas, financial planner at National Bank in Laval.
Contributing to an RRSP offers significant tax benefits but also has repercussions on social security programs that taxpayers are entitled to, such as Old Age Security (OAS) and the Guaranteed Income Supplement (GIS). So for some investors, especially GIS beneficiaries, it may be more favourable to make withdrawals from their TFSA. Be sure to make the decision that’s right for your situation! If needed, consult your advisor who can enlighten you, or visit nbc.ca/investment to learn more.
(up to 18% of earned income)
(Indexed to the CPI and rounded to the nearest $500)
(regardless of earned income)
|Creation of new contribution room if funds withdrawn||No
Yes, starting the following year
|Tax on income||No||No
|Tax on withdrawals||Yes||No|
|Plan maturity||The year of the 71st birthday of the contributor||None
You cannot contribute to your spouse’s TFSA, but you can transfer funds to your spouse for them to contribute to their own TFSA, and the income generated on this amount will not be subject to income attribution rules.3
*Subject to the terms and conditions applicable to the chosen investments
1. Some government programs (HBP, LLP) allow the accumulated funds in an RRSP to be withdrawn under certain conditions. Please consult the applicable government publications for details.
2. For both the RRSP and TFSA, some penalties may apply if you exceed the eligible contribution limits.
3. Income attribution rules are a tax mechanism whereby an individual who transfers property for the benefit of a third party must include any income earned on that property as part of his own income.
CONTESTS Enter our contests
COMMUNITY Posts Events
PUBLICATIONS Our Magazine Family Resource Directory
LFM BUSINESS NETWORK Learn more
COUPONS Click to save!
E-NEWSLETTER Subscribe to our E-newsletter Un-Subscribe
WRITE FOR US Guidelines & Submissions
POLLS Vote today!
SUGGESTIONS Reader's Survey Suggest a Listing
LFM About Us Our Mission Giving Back Contact Us