# RRSP's Contributions and withdrawls, Tax advice please.



## nrmck (Jan 3, 2015)

My wife did not work in 2014.
I did and earned 130000.
We are both early 40's.
We have $60000 in savings not growing or getting interest
I am considering putting the 60000 into an RRSP to offset my high rate of income tax.
However I am concerned about withdrawing that money in the years to come.
My income will continue to be in the six figures, so if I withdraw this money later the tax rate will be outrageous.
Can I transfer these RRSP's funds to my wife's name, so she could withdraw it? 
If she wasn't making an income she would be taxed in a lower bracket upon withdrawl.

We are considering a move in the future to a location with higher priced housing , and we may like to use these funds to add to our home buying equity.Or boat , or race car ...


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## OnlyMyOpinion (Sep 1, 2013)

Your posting is pretty lean on details. I think learning a lot more at your end would be helpful - if indeed you are in 40's with only $60k and truly consider using future funds for a race car?#% At the very least, sheltering your $60k in TSFA's to earn a few hundred bucks a year from a HISA might be a good first step.
I'd suggest examining your complete long term financial goals are (housing, spending, debt, savings, retirement, etc.) 
Rrsp contributions will result in a tax refund that should be invested to cover that future 'outrageous tax'. You are deferring tax with an rrsp, building value on a tax-deferred basis, and possibly withdrawing at a lower tax rate in the future.

No - you can't 'transfer' rrsp to your wife, but you can contribute to a spousal rrsp that she could w/d from in the future to 'split' income. She'd have to wait (I believe 2yrs) after your last contribution to withdraw without tax implications to you. http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/cntrbtng/spsl-eng.html

I'm not sggesting you are 'spam', but there seem to be a lot of new posters showing up recently throwing out a few half-baked questions. It gives one the impression that someone is posting just to 'churn' responses and get eyeballs on the CMF.


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## Guban (Jul 5, 2011)

@OMO, I wonder too about the new posters too. I hope that they really are genuine people who will build the CMF community, but I found it odd too.


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## Eclectic12 (Oct 20, 2010)

nrmck said:


> My wife did not work in 2014.
> I did and earned 130000.
> We are both early 40's.
> We have $60000 in savings not growing or getting interest
> ...


If you are in your 40's, only have about $60K saved - what makes you believe that when you are 65+ and withdrawing from the RRSP, there will be "outrageous" taxes?
Is your income from some sort of business which you will still have in retirement?

To be clear, your assumption may be true ... but I've seen many posts where when the details are explored - at withdrawal, income is at a lower level so that the withdrawal is at a better tax rate.

I'm also now clear on how it's possible to have $60K saved but not getting any interest. Even in a chequing account, you should be earning a pitiful interest rate but interest none the less.
Without really trying - a savings account could bump the interest to 1.3%.


If taxes are your overriding concern - have you opened a TFSA for yourself and your wife and considered putting the $60K into it? 
The 1.3% or better interest would then be tax free and should you need the money, there won't be any tax to pay when it's withdrawn.


As you've indicated, the nice thing about an RRSP (or better yet, a spousal RRSP as OnlyMyOpinion mentions) - is that it should generate a tax refund.


However, IMO it is more important to sort out what you are thinking for retirement. With such a high income that you are apparently confident in - it may be of more benefit to use the RRSP for retirement instead of a parking spot. 


The trouble is that with so few details ... any suggestions are going to be run of the mill and may or may not be relevant to your situation.


Cheers


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