# Stick with RRSP or go with TFSA?



## fullpampers (Sep 1, 2015)

So me and my girlfriend had no savings at all.

In the last two years I've done a lot of reading and setting up for budgeting and investments. I recently got up to opening an RRSP for my girlfriend

I just went with the standard logic of "catch up on unused contributions in RRSP, then start a TFSA for when you max out you RRSP". 

Thing is My girlfriend is in the lower income bracket (around 30k year). I don't see her changing jobs anytime soon (but it is a possibility)

I took control of her paycheck (with her consent) and started an RRSP for her. Right now there is about 3k in the RRSP and I am ready to make another deposit. The tax returns are reinvested in the RRSP.

My question is since she is in the lower income bracket, would I have been better off opening a TFSA? I plan on putting in around 6k/year (maybe a little more) into the account, not counting the tax returns.

Would I be better to try and max out the TFSA and then put what's left into the RRSP? If I open a TFSA, do I leave the RRSP as is? or to I take everything out and dump it into the TFSA? Or to I just keep the RRSP?


Thanks!

J-S


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## andrewf (Mar 1, 2010)

She is likely better off with a TFSA than an RRSP, given that she will likely face a higher marginal tax rate in retirement than she faces currently. If her circumstances change (significant increase in income), the conclusion would also likely change.


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## cainvest (May 1, 2013)

As mentioned above, TFSA would likely be the best for her. Also, I'd just leave the $3k RRSP investment in its place for now.


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## fullpampers (Sep 1, 2015)

Thanks for the help. That is what I though.

I just contacted the online broker to see if there are going to be inactivity fees if there are little to no transactions in the RRSP. I'll open a TFSA for her shortly.


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## Eclectic12 (Oct 20, 2010)

+1 ... the RRSP contribution room is carried forward so if income in the future goes up, one has not lost the opportunity (plus may have some $$$ in the TFSA to catch up, over and above whatever is available from other income).


Cheers


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## peterk (May 16, 2010)

fullpampers said:


> * My girlfriend is in the lower income bracket (around 30k year). *
> 
> ...
> 
> * I plan on putting in around 6k/year (maybe a little more)*


Ah look at what those evil Conservatives did giving those unfair tax breaks _only to the rich_ with their evil TFSA increases. fullpampers rich girlfriend must be stopped from taking advantage of poor Canadians who can barely make ends meet!


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## kork (Jun 9, 2012)

peterk said:


> Ah look at what those evil Conservatives did giving those unfair tax breaks _only to the rich_ with their evil TFSA increases. fullpampers rich girlfriend must be stopped from taking advantage of poor Canadians who can barely make ends meet!


thumbs up fullpampers


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## andrewf (Mar 1, 2010)

peterk said:


> Ah look at what those evil Conservatives did giving those unfair tax breaks _only to the rich_ with their evil TFSA increases. fullpampers rich girlfriend must be stopped from taking advantage of poor Canadians who can barely make ends meet!


I hate to tell you how simple-minded you are being.

This GF might be saving 20% on the $6000 being contributed, while a person in the top income tax bracket is saving 50%, so 2.5x the savings per dollar contributed. Now factor in that we are talking about an increase from 5500 to 10k, only $500 of additional contribution room is able to be used, so OP's GF saves 20% on $500 invested, whereas top tax bracket investor saves 50% on $4500 invested, or 9x2.5 = 23.5 times the tax break that OP's GF received. Of course, for most low-income savers that cannot save this aggressively, the difference in tax break is infinite (50%*$4500/20%*$0).

Based on your support for this tax policy, I assume you would also support a combined policy of foregoing $1 billion in income tax revenue by giving every Canadian $1, and the richest person in Canada the remaining $965 million. Technically, every tax payer is seeing a reduction in income taxes, so this policy is perfectly fair. Does this illustrate why some people may oppose the TFSA expansion?


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## Spudd (Oct 11, 2011)

I would also suggest that you involve your gf in these decisions. At least make sure she is aware of what you are doing with her money and why. Everyone should be aware of their own personal finances even if they find it boring.


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## peterk (May 16, 2010)

Your example calculations are just as exaggerated as my assertion (which I intended it to be).

I was simply pointing out the fact that a low income person can indeed make use of the new TFSA. A low income person who is making a full 19k less than the median income (49k) and is substantially in the bottom half of income earners, I might add.

Clearly "the rich" can and do benefit more and more easily. But fullpampers GF is a fantastic example where the "line" of who benefits is being drawn a lot lower than where many of you claim it to be.


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## gardner (Feb 13, 2014)

peterk said:


> I was simply pointing out the fact that a low income person can indeed make use of the new TFSA.


Not really. A low income person could do just as well with the "old" $5,500 TFSA it seems to me.

Don't get me wrong -- I like the TFSA, and I like the expansion to 10K, even if it is, relatively speaking, pretty small potatoes to me. But I do absolutely understand the logic showing that the expansion is a greater benefit to those that have money in the first place. I think that this is the nature of tax reduction/sheltering programs in general -- the folks that pay more taxes (in an absolute sense) are the beneficiaries, and those are the ones who have the highest income and are probably most able to pay taxes.


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## peterk (May 16, 2010)

gardner said:


> Not really. A low income person could do just as well with the "old" $5,500 TFSA it seems to me.


What's not really? The OP says "yes"! 30k income and 6k _or more_ in annual savings. It is a real life example.


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## peterk (May 16, 2010)

How much do you think it costs for young people to live anyways? $500 for rent (shared, obviously), $500 for food and bills, $500 for entertainment and transportation (that's pretty lavish). Someone making 30k/year takes home 24k after tax and CPP/EI. Spending 18k/year there is your 6k savings.

I have lived off of 12k/year all through University ($300 food and bills, $400 rent, $300 entertainment and transport), and I barely suffered at all. Maybe having an expanded TFSA will encourage young low-income earners to live simply and save for their futures.


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## andrewf (Mar 1, 2010)

However, OP's GF still has tonnes of unused RRSP contribution room, in which case we are actually overestimating the benefit of the TFSA expansion for her in this case.

Your argument is akin to saying that you sometimes win the lottery, so buying tickets is a good investment strategy. If you look at the total population, it doesn't hold up as a very sound argument.


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## fullpampers (Sep 1, 2015)

Spudd said:


> I would also suggest that you involve your gf in these decisions. At least make sure she is aware of what you are doing with her money and why. Everyone should be aware of their own personal finances even if they find it boring.


I do involve her, she trusts me doing the best I can with what I know. I'm still learning and reading a lot, and hopefully, I don't screw up too bad... She is actually tired of hearing me talk about this! 

We basically put all the money in one pot but since it is still technically her money, I'm going the safer route with a 25% VAB 25% VCN 50% VXC portfolio (à la Canadian Couch Potato).


Mostly, my paycheck pays for everything (and my investments) and most of hers go to a tangerine account for renovations on our two-apartment building. We have made a lot of repairs this summer so we are just shy of 10k in that account. once it gets back to 10k I plan on dropping the over flow into her TFSA, so if all goes well I should max out her TFSA pretty soon.


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## peterk (May 16, 2010)

How is earning very little while scrimping and saving responsibly a "lottery win". It isn't a matter of luck. Perhaps if the total population acted responsibly with their money like the OP then this would be a different argument. 

You do make a point about the RRSP room though, and from a tax perspective that does neutralize most of the benefit. However a TFSA is still a lot more flexible of a savings vessel than an RRSP, especially for a young person. I'll concede I was not considering RRSP room available as well which obviously it will be if the person is earning income.


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## andrewf (Mar 1, 2010)

You are saying that there exists a person with below-average income who can benefit from the TFSA, therefore the TFSA benefits some low-income people. May be true, but it's an incredibly weak statement. It's like saying somebody wins the lottery, therefore buying a lottery ticket is sometimes a good idea. This is also true, but not very meaningful.

You're using a weak statement to justify a much stronger one: that the TFSA expansion is a fair policy because it provides a 'fair' amount of benefits to both low income and high income individuals. The reality is that the rich benefit 10x, 20x, more than low-income individuals. It's akin to taking a billion dollars and giving 99% of it to the richest in Canada. Maybe everyone gets a piece, but would you consider that a fair policy?


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## kork (Jun 9, 2012)

Something also worthwhile considering is that the TFSA is relatively new... Most young people can't contribute to RRSP's either until they get older, but it's nice to have the contribution room in your 40's and 50's to catch up on...

Same deal with TFSA's. People are complaining that they can't max it out but "today" but in 15 years when you've been working hard and the kids have moved out, etc... Nobody complains about the $24,000 a year I can put in my RRSP to offset my income for a later time...

Overall, investment vehicles are great for everyone. However, in tax terms, RRSP's are great for people who earn a lot of money and want to defer taxation. TFSA's should be a blessing to EVERYONE and for those who don't earn a high income, put your $ into TFSA's, don't even think about the MUCH LARGER RRSP.


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## Eclectic12 (Oct 20, 2010)

gardner said:


> peterk said:
> 
> 
> > I was simply pointing out the fact that a low income person can indeed make use of the new TFSA. A low income person who is making a full 19k less than the median income (49k) and is substantially in the bottom half of income earners, I might add.
> ...


Sure ... but at the same time, I recall lots of posts along the lines of "based on how little the TFSA is used, there won't be *any* low income people contributing more than $5.5K".




andrewf said:


> However, OP's GF still has tonnes of unused RRSP contribution room, in which case we are actually overestimating the benefit of the TFSA expansion for her in this case.


Tonnes? 
I don't recall anything indicating any ages so this is possible or maybe not.


In any case ... before the TFSA expansion is looks like it was slightly more TFSA contribution room being granted than RRSP contribution room per year. Now it's double the TFSA contribution room (where the advice is that at this income level, it is better to use first) and a small increase in the yearly RRSP contribution room.

You will have to help me out ...

What is it worth to have twice the room for the better choice?
Why is not using the second best choice mean there's an over-estimation?


Personally ... I think more details and a broader spectrum are needed before the conclusions being drawn have any weight.


Cheers


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## Eclectic12 (Oct 20, 2010)

peterk said:


> ... You do make a point about the RRSP room though, and from a tax perspective that does neutralize most of the benefit.


I'm not following how having unused RRSP room is changing the benefit of the TFSA.

If from a tax perspective, there is an advantage to the RRSP at this income level - then the advice should be to use the RRSP.
[Or maybe it works out the best to contribute the $6K to the RRSP and then contribute the tax refund to the TFSA?]




peterk said:


> ... However a TFSA is still a lot more flexible of a savings vessel than an RRSP, especially for a young person. I'll concede I was not considering RRSP room available as well which obviously it will be if the person is earning income.


Has the difference been figured out and a benefit set for it?

Prior to TFSA limit going up, RRSP contribution room and TFSA contribution room would be somewhat equal, depending on how much of the $30K income is "earned" and other factors such as a pension adjustment (PA).

After the TFSA limit went up, RRSP contribution room is being granted far more slowly than TFSA contribution room.


More of what's the better choice (according to the thread) is better, is it not?


Cheers


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## peterk (May 16, 2010)

Eclectic12 said:


> More of what's the better choice (according to the thread) is better, is it not?


Yes, I think it is.


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## janus10 (Nov 7, 2013)

kork said:


> Something also worthwhile considering is that the TFSA is relatively new... Most young people can't contribute to RRSP's either until they get older, but it's nice to have the contribution room in your 40's and 50's to catch up on...
> 
> Same deal with TFSA's. People are complaining that they can't max it out but "today" but in 15 years when you've been working hard and the kids have moved out, etc... Nobody complains about the $24,000 a year I can put in my RRSP to offset my income for a later time...
> 
> Overall, investment vehicles are great for everyone. However, in tax terms, RRSP's are great for people who earn a lot of money and want to defer taxation. TFSA's should be a blessing to EVERYONE and for those who don't earn a high income, put your $ into TFSA's, don't even think about the MUCH LARGER RRSP.


Good points. Or, how about those that downsize their home as part of their retirement strategy and potentially unlock hundreds of thousands of dollars of equity? Having large contribution room in your TFSA would likely play into that strategy to create a tax free income stream.


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## My Own Advisor (Sep 24, 2012)

For most Canadians, I think the more you can avoid taxes going forward (i.e., max out the TFSA and use it as a retirement account) the better off they will be.

TFSA wins in my book. I try and max it out for my wife and I every year. 2016 will be a challenge though but we'll try!


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## andrewf (Mar 1, 2010)

Eclectic12 said:


> Tonnes?
> I don't recall anything indicating any ages so this is possible or maybe not.


Even if this is the first year earning an income, if RRSPs have not been used extensively, we know OP's GF has RRSP contribution room of 18%*30k=$5400 per year going forward.




> In any case ... before the TFSA expansion is looks like it was slightly more TFSA contribution room being granted than RRSP contribution room per year. Now it's double the TFSA contribution room (where the advice is that at this income level, it is better to use first) and a small increase in the yearly RRSP contribution room.
> 
> You will have to help me out ...
> 
> ...


Since OPGF has enough RRSP contribution room (more than intended to be used), the value of the additional TFSA room should be compared not to saving that money in a non-reg account but saving it in an RRSP. And the benefit is thus substantially smaller. Instead of 20% of the annual return on $500, it is the difference between current and retirement marginal tax rate in retirement (probably not much more than 20%)*annual return*$500. So, we're talking about perhaps the cost of a cup of coffee a year. A high income individual who already saves heavily enough to use all RRSP and TFSA room gained 4500 * 50% * annual return per year, let's say it is 6% return, that works out to an additional $135 tax cut per year each year. Versus a benefit of perhaps $1.50 for OPGF.




> Personally ... I think more details and a broader spectrum are needed before the conclusions being drawn have any weight.


Perhaps about this particular instance, but the logic is sound in demonstrating that those with reasonable savings rates in the lowest income/wealth quartiles obtain benefits approaching zero from TFSA expansion. It is a tax cut for the wealthy, wrapped in enough complication to mask its true effect.


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## andrewf (Mar 1, 2010)

Eclectic12 said:


> More of what's the better choice (according to the thread) is better, is it not?


That is the rhetoric. My response to this was the hypothetical arrangement I mentioned earlier:





andrewf said:


> [...]
> Based on your support for this tax policy, I assume you would also support a combined policy of foregoing $1 billion in income tax revenue by giving every Canadian $1, and the richest person in Canada the remaining $965 million. Technically, every tax payer is seeing a reduction in income taxes, so this policy is perfectly fair. Does this illustrate why some people may oppose the TFSA expansion?


Technically everyone has a higher after-tax income, but to whom are the benefits accruing in large part?


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## janus10 (Nov 7, 2013)

andrewf said:


> A high income individual who already saves heavily enough to use all RRSP and TFSA room gained 4500 * 50% * annual return per year, let's say it is 6% return, that works out to an additional $135 .


And how much additional tax does a high income individual pay vs. a low income individual? Obviously it is preferable to earn more, even though your absolute and relative tax burden is higher.

And, perhaps I am not unusual in thinking that a high income individual may not enjoy the same benefits from our social safety nets (e.g. Never received UI let alone welfare, CTB, haven't had any major health issues, perhaps never had children or maybe just one, etc.)

The benefit of a TFSA expansion is directly related to how much you invest and stay vested in it. It is easier to take full advantage if your discretionary income is high of course. If the expansion is unfair and anti-Canadian, then shouldn't we be lobbying for the complete dissolution of it? Because, any contribution level will always benefit those with plenty vs, those with little.

OTOH, I wager that the more income one has, the greater disparity between what one contributes to the government coffers vs. what one receives. Where is the hue and cry from the masses to right this imbalance? Thank goodness we live in a country where we (begrudgingly) accept that those that have indirectly help those that have not.


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## andrewf (Mar 1, 2010)

Did you just disagree with yourself by the end?

If it helps to put it in other terms, the TFSA expansion is regressive, because it shifted the remaining tax burden to be borne more by those with lower incomes.


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## Eclectic12 (Oct 20, 2010)

andrewf said:


> Even if this is the first year earning an income, if RRSPs have not been used extensively, we know OP's GF has RRSP contribution room of 18%*30k=$5400 per year going forward.


That doesn't seem all that higher than the $4000 of TFSA room that's left.




andrewf said:


> Since OPGF has enough RRSP contribution room (more than intended to be used), the value of the additional TFSA room should be compared not to saving that money in a non-reg account but saving it in an RRSP. And the benefit is thus substantially smaller.
> 
> Instead of 20% of the annual return on $500, it is the difference between current and retirement marginal tax rate in retirement (probably not much more than 20%)*annual return*$500 ...


Okay .... I'll have to think through it though as some of the numbers look suspect. 
For example ...



andrewf said:


> A high income individual who already saves heavily enough to use all RRSP and TFSA room gained 4500 * 50% * annual return per year ...


Really? 
We are talking about the TFSA additional room, right?

Last I checked, the contributions were after-tax so the first cut of taxes has already been taken.
It's not the 4500 extra room x 50% but whatever growth the 4500 had, at whatever tax rate that type of income would accrue in a taxable account.
[At least that's the easy comparison ... it gets complicated when one tries to figure out a 50% refund, how it's invested and what tax rate the withdrawal will occur at.]

For it to be at 50% with say a GIC, then that would likely make it around 4500 x 0.03 x 0.50 which is $67.50.

If the 4500 buys a eligible dividend paying stock, the yearly tax avoided is 4500 x yield x eligible dividend MITR. 
Since the 2015 Ontario over $220K income MITR for income is 49.53%, I'll use the corresponding eligible dividend rate of 33.82% with a yield of 8%. This works out to $121.75 There likely should be capital gains at 24.78% mixed in at whatever points sales are made.

Of course, if the stock is sold for a loss, then the gov't potentially gets more tax revenue as the capital loss can't be used against taxable capital gains.




andrewf said:


> It is a tax cut for the wealthy, wrapped in enough complication to mask its true effect.


Are we sure of the true effect?

I found it strange to read that CRA stats for 2013 TFSAs indicate that about 17% of the $20K to just under $25K income band maxed their TFSAs while about 32% of the $150K to just under $250K income band maxed out their TFSA.
http://business.financialpost.com/p...-tfsas-from-all-walks-of-life?__lsa=70a6-0de3

The article doesn't go into the numbers for those over $250K but the chart implies that roughly half have maxed out their TFSA.

It does not look like the conventional thinking that those will big incomes will automatically max out their TFSA contributions.
It makes me wonder what those upper income earners and their advisors are thinking by not using up the available room. It seems an obvious win to me.


I could see the lower income earners to struggle to make contributions or not be knowledgeable but the high flyers?


Cheers


*PS*

I missed highlighting that the info showing high income earners haven't maxed out their TFSA contribution room is from 2013 and won't include the bump up in the yearly TFSA contribution room.

Without knowing what's driving why those one would think would be the first to max out their TFSA apparently are not doing so - it's hard to say whether the same will happen with added contribution room or whether there's a knowledge/time factor delaying when it happens.


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## londoncalling (Sep 17, 2011)

I am a high income earner. I barely scratch the surface on my TFSA contribution. I max out my RRSP each year and put the refund towards debt repayment (mortgage). Once the mortgage is paid off these dollars will go to TFSA. I think that higher income earners also have higher spending rates. I consider my situation deserved but also fortunate. I have won the birth lottery but I also work very hard to keep my place in the world. It is obvious the OP should fill the gf's TFSA before RRSP but each is a great savings vehicle for its intended purpose. 

Cheers


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## Soon Forget (Mar 25, 2014)

londoncalling said:


> I am a high income earner. I barely scratch the surface on my TFSA contribution. I max out my RRSP each year and put the refund towards debt repayment (mortgage). Once the mortgage is paid off these dollars will go to TFSA


londoncalling - interesting that you are completely skipping TFSA investing until the mortgage is gone, rather than doing both and carrying the mortgage a little longer. Can I ask your approximate age and how many years away you are from paying off the mortgage and making the switch to TFSA? Also is your high income stable? Where would you pull funds from if you hit a slow patch and your capital is mostly in your house.

Until now I've been doing the reverse of you, keeping the TFSA maxed and then applying any extra to the mortgage. Although lately I've been thinking of doing more like you now that the TFSAs have a nice base, maybe holding off on further TFSA investing for a while and getting rid of the mortgage much sooner.


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## My Own Advisor (Sep 24, 2012)

londoncalling - interesting that you are completely skipping TFSA investing until the mortgage is gone, rather than doing both and carrying the mortgage a little longer.

I found that interesting as well....

In our case, we prefer to max out the TFSAs, then focus on mortgage debt. Our stocks are yielding 4-5% inside our TFSAs. Our mortgage is running about 4% if you consider you pay your mortgage with after-tax dollars.

Don't get me wrong, I want to kill debt, I'd just rather have a maxed out TFSA sooner than later which means more diversification (away from real estate) for us.


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## lost in space (Aug 31, 2015)

Perhaps posted already but this was Garth's advice

1. Shift taxation within your life.
This is easy. During years when you are gainfully employed, contribute to an RRSP, deduct this amount from your taxable income, get a refund and invest that outside your plan. Then during those times of your life when you are fired, laid off, punted, outsourced, severed, displaced, rightsized or just general screwed by The Man, you can cash in the RRSP, live off the money it contains, and pay little if any tax while doing so. What you’ve done is build up your own emergency reserve, and at the same time shifted the tax burden from the years of employment to the period of freedom.

2. Split income with your spouse
Now, here’s an excellent use for your spouse. If you earn more than him or her, or your spouse plans on taking time off, or is older and due to retire sooner, or a babe still in school, then open a spousal plan. The law allows you to contribute into a plan for your spouse up to your own contribution limit. You get to deduct the funds from your own taxable income, but they become the property of the other person. After three years in there, the money can be accessed by your spouse (so choose carefully) and used for whatever, and is taxed at their rate – presumably lower than your. So, you have income-split. Just be careful no money is taken before the three years or it will be attributed back to you, and cause a giant, ugly domestic dispute.


3. Finance a kid
Speaking of a spousal plan, one of the best uses of RRSP money is to pay the household expenses during a mat leave. If a spousal plan is in place, your squeeze can cash it in (ensure each withdrawal is less than $5,000 to minimize the withholding tax), and use the money to replace lost income. Of course, to make this work efficiently, you will need to plan the pregnancy at least three years in advance with the mat leave commencing on January 1st. Piece of cake. Here’s a calendar.

4. Upgrade your skills.
Rules also permit you to raid your RRSP to go to school, or send your spouse there. The Lifelong Learning Plan allows $10,000 a year to be taken, to a max of twenty grand (or forty between two spouses). Then, after school’s done, you have 10 years to put the money back into your plan. If you don’t, it will be added to your taxable income annually. This sure beats paying a bank interest on a tuition loan. Plus, you can put money into your RSP, get a tax refund for doing so, then turn around and take it out for school.

5. Buy a house (dubious), and lever your downpayment (better).
Ditto for the Homebuyers’s Plan. Up to $50,000 can be taken from the RRSPs of you and your spouse for the purpose of buying your first home. Then you have 15 years to repay it, starting in the second year after the withdrawal. Don’t make the annual payments, and the bucks will be added to your income and taxed at your marginal rate. While buying a home is a bad idea right now in many cities, and while the HBP actually has no inherent benefit to it, it does allow you to lever a bit. For example, if you both took your $50,000 down payment and RRSP’d it, leaving it there for just 90 days, you might get a refund of $15,000 which can be used at closing to reduce the mortgage. But, knowing you, it’d go into a hot tub upgrade.

6. Generate a tax refund which you promise not to piss away in Aruba.
That should be obvious. Invest extra cash in an RRSP, get a refund cheque and put the money into investments inside your TFSA. This is called revenge. It tastes good.
Bonus thing to do with an RRSP: retire.

Yes, I know this is exactly why the thing was invented 60 years ago, and I’m quite aware the mama of all retirement crises is now just a few years away, since seven in ten people no longer have a viable company pension. But the TFSA is emerging for anyone under 35 as the retirement vehicle of choice – so long as you keep it fully funded each year, and invested for growth. Still, there is a role for RRSPs, since money can grow inside these suckers tax-free until you turn into a hideous wrinkly with glass ankles. Then you can ***** and moan about the tax you pay collapsing them.


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## namelessone (Sep 28, 2012)

1. Do you value your time? 2. Do you expect your taxable income to be higher at retirement than your current taxable income ? if you answer yes to both. Go with TFSA. 
Personally, I prefer TFSA. I don't like calling the bank to withdraw from RRSP and I don't like spending time dealing with RRSP when filing taxes.


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## Valueinvestor (Dec 10, 2014)

Tax free for sure. RRSP is only advantageous for anyone with a higher income


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## OnlyMyOpinion (Sep 1, 2013)

In spite of Garth's barfs, if you are saving for retirement, I don't think a person should be withdrawing money from an RRSP for a year of mat leave or a year off work, etc. unless it is absolutely necessary - and it shouldn't be. 
The loss of that money and its tax-sheltered earnings over 20, 30, or 40 years until retirement is material.
Also, you need to consider whether the TSFA by itself will provide enough annual savings for retirement - with the current $10,500 limit it can compete with the room a RRSP generally provides (depends on your income, if you have a company pension, etc.). 
But if the TSFA is lowered back to $5,500 it will probably only be sufficient to provide $15,000 to $20,000/yr when you retire (save 35yrs, earn 5%, wd 4%/yr). Government cpp/oas/gis might add another ~$20,000/yr in an average case, so a total of $35k-$40k/yr. 
To the degree you are able to, I think a person should be maximizing both their TSFA and RRSP. Don't let the prospect of future taxes wag your savings dog today.


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