# Are you making a 2014 RRSP contribution?



## cainvest (May 1, 2013)

Same line of thought on the TFSA poll but with RRSPs. What are you planning to claim on your 2014 taxes?


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## Jorob199r (Sep 4, 2014)

I used to have max contribution room every year that I used. I now work for govt and as a result no longer get much RRSP room to play with due to pension benefit.


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## My Own Advisor (Sep 24, 2012)

People that can max out their RRSP every year must be doing well financially. That's a good chunk of change to invest every year, pension benefit or not. _Well done_ to those who can max out their RRSP and have done that for years.


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## the-royal-mail (Dec 11, 2009)

This is one that I rarely contribute to, due to how restrictive it is. I much prefer the TFSA as that one allows me to pay the tax at source and then the money can be set aside there until needed or used for tax-free growth. The RRSP is much harder to deal with. I know it functions as a retirement savings tool but it has never been a huge attraction for me. I have a lof of "empty" contribution room in that account that will likely never be filled.


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## Video_Frank (Aug 2, 2013)

Yes, full amount gets added to our account. We wait to see our NofA to see what our contribution limit for the year is, then contribute.


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## My Own Advisor (Sep 24, 2012)

@royal, fair comment for sure, based on the restrictions you prefer other accounts.


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## 1980z28 (Mar 4, 2010)

Recently added another 20k it is over my max room,but it has to go somewhere

will also invest tax refund total


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## RBull (Jan 20, 2013)

Not any more. Stopped several years ago when I started working working PT. 

Both me and my wife made max payments every year from 1982 to 2011.


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## My Own Advisor (Sep 24, 2012)

Very impressive RBull, says a great deal why you are where you are financially because of those steady contributions.


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## RBull (Jan 20, 2013)

Thank you MOA. 

You'll be there soon.


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## Ihatetaxes (May 5, 2010)

Have maxed every year for the last 20. It certainly adds up for us to max two RRSP's, two TFSA's and family RESP for two kids. I try to max the TFSA's and RESP on January 1st and the RSP's in March/April. $64,540 this year plus another $50k+ that went into non-registered accounts.

I have a couple of younger employees and I have suggested they max their TFSA first and might be better off to save their RSP contribution room for a few years when they will be making significantly more money if they are successful with us. We also offer direct to RRSP payroll with no tax deductions (generally only do this in the fall and only once CPP and EI limits have been reached).


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## cainvest (May 1, 2013)

Even at this early stage there is quite a different response to RRSP vs TFSA, which of course is to be expected to some degree. There are numerous differences which can create a tax gain or loss structure as opposed to the TFSA plus the added complication of pensions.


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## cainvest (May 1, 2013)

the-royal-mail said:


> This is one that I rarely contribute to, due to how restrictive it is. I much prefer the TFSA as that one allows me to pay the tax at source and then the money can be set aside there until needed or used for tax-free growth. The RRSP is much harder to deal with. I know it functions as a retirement savings tool but it has never been a huge attraction for me. I have a lof of "empty" contribution room in that account that will likely never be filled.


TRM, what are the restrictions that concern you the most?


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## the-royal-mail (Dec 11, 2009)

I don't like the fact that I have to pay taxes on the money when removed plus all the rules on discharging the account, converting to RRIF at the other end etc. These accounts are set up in a way to discourage you from withdrawing. I don't like that. It is also not very good for storing emergency fund money. I know you get a tax "refund" when contributing, but that amount of money does not compensate for the downsides, in my view.

With the TFSA it is much more open to how and when you can take the money out, making it much more fluid and useful for my ever-changing life needs. I just get a much better feeling and don't have to jump through all sorts of hoops to use this account.

I need freedom when it comes to managing and accessing my money.


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## HaroldCrump (Jun 10, 2009)

Most of the "restrictions" of an RRSP are imagined, not real.
People have built mental blocks around how they think the RRSP works, what the real benefits, and liabilities are.

_The RRSP is functionally equivalent to a TFSA._

- Paying taxes upon withdrawal - well, the TFSA is already pre-taxed. Do you prefer to pay taxes now, or later :biggrin:

- Conversion to RRIF is very easy. I believe some brokerages now allow online conversions. At worst, a form will be required.

- If withdrawals are made overly easy like a chequing account, well, that is how people will use the RRSP, which defeats the purpose.

- The "refund" is an illusion. The "refund" is simply the PV of future tax liability.

Let's keep in mind that the RRSP is a _retirement _savings plan, not an LOC, chequing accounts, or HISA.

When you compare an RRSP to other retirement savings vehicles such as home equity, registered defined benefit pension plan, defined contribution plan, Locked in Group RRSPs, etc. - an individual RRSP is by far the most flexible form of savings vehicle.


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## hboy43 (May 10, 2009)

Hi:

As I have not worked in 13 years, I am actually in the process of paying out my RRSP. I cannot see either the tax rates or my personal tax rate being lower in 19 years when I am 71. So every year I take some combination of RRSP withdrawl and capital gain such that I pay about $5000 income tax and make sure I sop up all my DTC from the ever growing dividends. I used to shoot for $2000 annual tax but realized I was shooting myself in the foot long term. Even $5000 a year may be too low for lowest lifetime taxes.

I intend to save some RRSP for one day conversion to RRIF for the pension credit.

hboy43


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## RBull (Jan 20, 2013)

For us it was not a question of an RRSP vs a TFSA. We were pretty well done with RRSP's when the TFSA arrived. TFSA is a no brainer but for some an RRSP may also make a lot of sense. 

RRSP's were around many years before as the only advantaged savings option. Our RRSPs have served us well and have been a fantastic forced savings plan. Based on our working income/tax brackets our withdrawal money will also be taxed at a lower rate in retirement, considering what we know now. We have the freedom to remove some RRSP $$ before we have to think about an RRIF, and the RRIF withdrawal rates will likely be relaxed in coming years. This is a pretty straightforward process-form, tax at source, reconcile at tax time. We also max out our TFSA's from our non registered accounts and plan to for years to come in retirement, as finances allow. 

This gives us overall freedom with the management of our money, with plenty of options and good access to any of it.


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## cainvest (May 1, 2013)

the-royal-mail said:


> I don't like the fact that I have to pay taxes on the money when removed plus all the rules on discharging the account, converting to RRIF at the other end etc. These accounts are set up in a way to discourage you from withdrawing. I don't like that. It is also not very good for storing emergency fund money. I know you get a tax "refund" when contributing, but that amount of money does not compensate for the downsides, in my view.


You're definitely not alone in your thoughts/concerns and keeping emergency funds in a TFSA makes perfect sense.

Just wondering if you have looked at the current vs future tax situation to see what benefit (if any) an RRSP provides you?
I'm asking because of your "that amount of money does not compensate for the downsides" comment. Say, for example, you gained a free 10% return on the amount you put into RRSP for that year ... would that be worth it then? Please don't take this the wrong way, everyone has to do what they are comfortable with, I completely understand and agree with that.


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## cainvest (May 1, 2013)

RBull said:


> For us it was not a question of an RRSP vs a TFSA. We were pretty well done with RRSP's when the TFSA arrived. TFSA is a no brainer but for some an RRSP may also make a lot of sense.
> 
> RRSP's were around many years before as the only advantaged savings option. Our RRSPs have served us well and have been a fantastic forced savings plan. Based on our working income/tax brackets our withdrawal money will also be taxed at a lower rate in retirement, considering what we know now. We have the freedom to remove some RRSP $$ before we have to think about an RRIF, and the RRIF withdrawal rates will likely be relaxed in coming years. This is a pretty straightforward process-form, tax at source, reconcile at tax time. We also max out our TFSA's from our non registered accounts and plan to for years to come in retirement, as finances allow.
> 
> This gives us overall freedom with the management of our money, with plenty of options and good access to any of it.


Exactly my situation as well RBull and having both TFSA and RRSP gives one the flexibility to adjust for the future.


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## Guban (Jul 5, 2011)

mrPPincer said:


> A few years ago I converted mine to a RRIF*, but in 2013 I made too much in capital gains so I opened up a new RRSP and maxed it out (plus the allowable extra 2K).
> For 2014 I won't be adding new money to RRSP, but as I still work part-time, 65 days or so per year, my allowable room is still increasing by a small amount every year, so if needed I could still max it out again sometime.
> 
> *My thinking was to slowly de-register the RSP while my income was lower during semi-retirement (not to spend, just to reallocate to non-registered), and to use earned income from part-time work to max out the TFSA every year, but I didn't count on my non-registered investments to do as well as they did; not a bad problem to have though


Just curious. Why did you originally convert your RRSP to a RRIF? Pension credit amount? From what I hear, most people seem to wait until the last moment to convert, and those that convert early only convert enough to get the pension credit amount.


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## jaybee (Nov 28, 2014)

I've made a maximum contribution every year for 10 years. I might add a bit, but I'm concentrating on my TFSA and unregistered accounts. I'm also belong to a government defined benefit pension plan, so I'm starting to worry about the tax man when it comes time to retire, so I won't be adding a lot of money to my RRSP going forward.


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## Synergy (Mar 18, 2013)

HaroldCrump said:


> Most of the "restrictions" of an RRSP are imagined, not real.
> People have built mental blocks around how they think the RRSP works, what the real benefits, and liabilities are.


I agree with this. For me it's more of a tax optimization process. Ensuring that I don't contribute too much in years when I know that I will be in a significantly higher tax bracket come retirment. Hence why I max my TFSA, optimize my RRSP contributions and put the rest into non-registered accounts.


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## uptoolate (Oct 9, 2011)

Ihatetaxes said:


> I have a couple of younger employees and I have suggested they max their TFSA first and might be better off to save their RSP contribution room for a few years when they will be making significantly more money if they are successful with us. We also offer direct to RRSP payroll with no tax deductions (generally only do this in the fall and only once CPP and EI limits have been reached).


Also have maxed out RRSP for wife and I from 1983 until now. And TFSAs when they became available. Have helped the kids set up their RRSPs and TFSAs and also encouraging them to fill these. They have been successful in filling their RRSP room but won't be taking the deduction until they are (hopefully) in higher tax brackets.


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## My Own Advisor (Sep 24, 2012)

@harold,

I don't see it this way per se although I do agree with many things above, not sure about:

"- The "refund" is an illusion. The "refund" is simply the PV of future tax liability."

The refund is very real actually.

The problem is, the refund is actually the governments' money. You owe it back at some point or as you have said, PV for FV tax liability. Best invest or reinvest that money very wisely then...

This is what I like: You know your tax-rate today with the TFSA, and thus can contribute money after-taxes accordingly.
This makes TFSA a sure-thing regardless of what your tax rate will or won't be. 

Nobody has any idea what the future holds, so the RRSP is an unknown tax liability although one would hope the withdrawals from it will come at a much lower tax rate than contributions.


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## passivedividends (Dec 16, 2014)

uptoolate said:


> Also have maxed out RRSP for wife and I from 1983 until now. And TFSAs when they became available. Have helped the kids set up their RRSPs and TFSAs and also encouraging them to fill these. They have been successful in filling their RRSP room but won't be taking the deduction until they are (hopefully) in higher tax brackets.


I second this. Many people I know don't know that you can fund your RRSP contribution, but delay taking the deduction until later tax years. This would allow for income/gains to be tax-deferred instead of getting taxed immediately in non-registered accounts.

For me, I still have a boatload of tuition credits to use (thanks UWaterloo) and delaying my deduction until it runs out.


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## Soon Forget (Mar 25, 2014)

Synergy said:


> I agree with this. For me it's more of a tax optimization process. Ensuring that I don't contribute too much in years when I know that I will be in a significantly higher tax bracket come retirment. Hence why I max my TFSA, optimize my RRSP contributions and put the rest into non-registered accounts.


Synergy do you still have a mortgage? If yes why do you choose to invest non-registered instead of paying down mortgage with those funds?

We do same as you - max TFSAs, optimize RRSPs (which is max mine, optimize wife's), but we've chosen to pay down mortgage with any extra instead of investing taxable. Emergency fund is kept in HISA taxable.

Figure once mortgage is gone at some point in (distant) future then we can invest taxable.


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## Synergy (Mar 18, 2013)

Soon Forget said:


> Synergy do you still have a mortgage? If yes why do you choose to invest non-registered instead of paying down mortgage with those funds?
> 
> We do same as you - max TFSAs, optimize RRSPs (which is max mine, optimize wife's), but we've chosen to pay down mortgage with any extra instead of investing taxable. Emergency fund is kept in HISA taxable.
> 
> Figure once mortgage is gone at some point in (distant) future then we can invest taxable.


$0 debt, no mortgage, own my own house, no car payments, etc. If I had any debt I would be paying it down fast. I keep a small unsecured LOC (20K) to act as an emergency fund.

I agree with those that may max their RRSP and decide to delay some or all of their deduction until later years, but for me right now I'd prefer to have the cash on hand for other opportunities - business ventures, etc. I don't mind working and I won't have a problem using up unused RRSP contribution room in the future.


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## HaroldCrump (Jun 10, 2009)

My Own Advisor said:


> "- The "refund" is an illusion. The "refund" is simply the PV of future tax liability."
> The refund is very real actually.
> The problem is, the refund is actually the governments' money. You owe it back at some point or as you have said, PV for FV tax liability. Best invest or reinvest that money very wisely then...


If we assume same average tax rate during withdrawal as during contribution, the refund is basically PV of future tax liability.
And yes, the so-called "refund" must be plowed back into the RRSP immediately to ensure no leakage.

Or, better yet, adjust your tax withholdings in such a way that there is no refund.
That will eliminate all confusion.


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## Islenska (May 4, 2011)

Put in $10k this year just for the helluva it, we have been contributing the max since 80's so a nice chunk accumulated but will pay the piper in not to distant future.

Always liked RRSP as I felt it was a "forced savings" and not having a pension plan it was a good part of the nest egg. Amazing the people I know around here that have very little socked away!


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## Tawcan (Aug 3, 2012)

Have maximized RRSP contribution every year since I started working. Planning to do the same this year.


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## Guban (Jul 5, 2011)

passivedividends said:


> I second this. Many people I know don't know that you can fund your RRSP contribution, but delay taking the deduction until later tax years. This would allow for income/gains to be tax-deferred instead of getting taxed immediately in non-registered accounts.
> 
> For me, I still have a boatload of tuition credits to use (thanks UWaterloo) and delaying my deduction until it runs out.


If you are in a high tax bracket, you may wish to take the RRSP deduction since it is used at the top tax rate. Tuition credits are non-refundable and are calculated using the lowest bracket (federally=15%).

I also hope that you have maxed out on your TFSA, as tax free is better than tax deferred (without the deduction).


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## 1980z28 (Mar 4, 2010)

Tawcan said:


> Have maximized RRSP contribution every year since I started working. Planning to do the same this year.


That takes a lot of courage

I have done the same from 1983 plus the extra when I could,will retire in 2 years at 56,love a good story,I have always stayed with the large caps,slow and steady always wins the race

The real estate way was my second choice ,two houses and 126 acres has done me well

good luck


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## Tawcan (Aug 3, 2012)

1980z28 said:


> That takes a lot of courage
> 
> I have done the same from 1983 plus the extra when I could,will retire in 2 years at 56,love a good story,I have always stayed with the large caps,slow and steady always wins the race
> 
> ...



Thanks, I figure it's a good idea to invest while I'm young. I still have a way to go before retirement. Would love to get into real estate investing one day.


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## Sherlock (Apr 18, 2010)

No, as I expect my retirement income to be higher than my current income due to how aggressively I'm saving. But if I get a big raise then I would reconsider.


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## NorthKC (Apr 1, 2013)

I originally planned to hold off on any RRSP contributions until 2015 until my workplace informed me yesterday that they do the RRSP matching based on the prior calendar year which meant that I needed to contribute by end of December in order to get the matching contribution in January. No contribution = no matching and no, I could not carry it forward to next year. However, I'm not going to claim the deduction until 2015 since the matching contribution will be taxable income in 2015, not 2014 and I'm expecting a higher salary next year.


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## passivedividends (Dec 16, 2014)

Guban said:


> If you are in a high tax bracket, you may wish to take the RRSP deduction since it is used at the top tax rate. Tuition credits are non-refundable and are calculated using the lowest bracket (federally=15%).
> 
> I also hope that you have maxed out on your TFSA, as tax free is better than tax deferred (without the deduction).


I wish I was in the high tax bracket a few years out of school!

Yup, I maxed TFSA first, then contributed to RRSP with my after-tax dollars. TFSA > RRSP > Margin is how I view it. Although for my US dividend holdings, I try to put most of them in my RRSP to avoid the withholding tax.


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## Ben1491 (Jan 13, 2012)

*Are you planning to contribute 2015 RRSP before Febuary ?*

I did this for more than 15 years before I retired.


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## the-royal-mail (Dec 11, 2009)

Duplicate content to a currently-active thread. Please search existing threads before starting new ones. Merging now...


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## JordoR (Aug 20, 2013)

I'm thinking of contributing about 10k this year. I've focused the last few years on maxing my TFSA instead, but will add to my RRSP now.


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## Ben1491 (Jan 13, 2012)

r-mail, this is entirely a different topic. It is for *2015 RRSP*.


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## the-royal-mail (Dec 11, 2009)

Hi Ben, I understand. You were basically wondering if anyone is contributing for next year, in the first part of the year. It's fair game to discuss that here. I don't think the OP meant to exclude 2015 stuff in this thread.


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## RBull (Jan 20, 2013)

cainvest said:


> Exactly my situation as well RBull and having both TFSA and RRSP gives one the flexibility to adjust for the future.


Good stuff. 

One of the challenges will be deciding just where and how to remove funds to minimize taxes and maximize benefits in retirement.


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## RBull (Jan 20, 2013)

HaroldCrump said:


> If we assume same average tax rate during withdrawal as during contribution, the refund is basically PV of future tax liability.
> And yes, the so-called "refund" must be plowed back into the RRSP immediately to ensure no leakage.
> 
> *Or, better yet, adjust your tax withholdings in such a way that there is no refund.*
> That will eliminate all confusion.


I made my contributions at the beginning of the year, completed whatever tax form it was and had tax at source adjusted accordingly. Saved and invested that towards the following years contribution.


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## AltaRed (Jun 8, 2009)

the-royal-mail said:


> Hi Ben, I understand. You were basically wondering if anyone is contributing for next year, in the first part of the year. It's fair game to discuss that here. I don't think the OP meant to exclude 2015 stuff in this thread.


Indeed. Why would ANYONE be talking about a 2014 contribution now? The time to do that was Jan 2, 2014. The time to do 2015 is about 16 days from now.


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## gladaki (Feb 23, 2014)

AltaRed said:


> Indeed. Why would ANYONE be talking about a 2014 contribution now? The time to do that was Jan 2, 2014. The time to do 2015 is about 16 days from now.


Isnt year start from the April ? I always thought it start after you file your tax.


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## cainvest (May 1, 2013)

gladaki said:


> Isnt year start from the April ? I always thought it start after you file your tax.


Yes, it's related to what you're claiming for 2014 taxes so it can include RRSP deposits make up to March 2, 2015 I believe.


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## Synergy (Mar 18, 2013)

gladaki said:


> Isnt year start from the April ? I always thought it start after you file your tax.


If you haven't used up your contribution allowance you have until March 2nd to contribute to your RRSP. I often make a lump sum contribution in Jan / Feb and have it applied to the prior year (my attempt to optimize my trax bracket). Contribution from Jan-March 2nd can be used as a deduction for either the current yr, a future yr or the prior yr.


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## gardner (Feb 13, 2014)

Out of curiosity, which is the correct choice if one is over the age limit or has no prior year employment income, and has 0$ contribution limit. Is this a full contribution of 0$ or "not contributing"? How about if I have this years contribution room but also unused room from prior years -- if I use JUST this year's room, am I "some but not all" or "all"?


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## Ben1491 (Jan 13, 2012)

AltaRed said:


> Indeed. Why would ANYONE be talking about a 2014 contribution now? The time to do that was Jan 2, 2014. The time to do 2015 is about 16 days from now.


Hahahaha, Red. Why would you think everyone is talking about RRSP for 2015 here ? I do not see anybody specified it is for 2015 tax year. The title of this tread is *Are you making any RRSP contributions for 2014*?. Therefore, I bet 99% of the people responded are for 2014 tax year !


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## cainvest (May 1, 2013)

Wow, nearly 50% doing their maximum this year ... I wouldn't have guessed the percentage would be that high.


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## My Own Advisor (Sep 24, 2012)

Same cainvest...there is no way we can max out both RRSPs and TFSAs and keep lump sum payments on the mortgage. That would be one helluva hat trick.

We have to pick 2 of 3 and do those very well in our house.


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## cainvest (May 1, 2013)

My Own Advisor said:


> Same cainvest...there is no way we can max out both RRSPs and TFSAs and keep lump sum payments on the mortgage. That would be one helluva hat trick.
> 
> We have to pick 2 of 3 and do those very well in our house.


Two out of those three is really good and I'd choose paying mortgage over RRSP as well.

I'll likely reduce my RRSP contributions in the following years, especially if the TFSA limit goes up significantly.


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## Eclectic12 (Oct 20, 2010)

My Own Advisor said:


> ... The refund is very real actually.
> The problem is, the refund is actually the governments' money.
> 
> You owe it back at some point or as you have said, PV for FV tax liability ...


Isn't it a "YMMV" ... I've contributed through a company group RRSP where the full $ went into the plan so from a "did I see $ back" point of view, there was no refund.

I'm also not sure about being able a blanket classification of being able to pay the taxes later and use the extra $ now as a "problem".
It's a variable that may or may not work out in one's favour.




My Own Advisor said:


> ... Best invest or reinvest that money very wisely then...


Hmmm ... I suppose that some of those who are concerned about paying extra taxes could pick losing investments to lower the tax bill ... but that seems counterproductive IMO. 




My Own Advisor said:


> ... This is what I like: You know your tax-rate today with the TFSA, and thus can contribute money after-taxes accordingly.
> This makes TFSA a sure-thing regardless of what your tax rate will or won't be ...


I'm curious as to what factors would be seen as modifying the TFSA contribution amount.
IAC, there are those who have been saying for years that the RRSP will be canceled so don't use it - who I also suspect that feel the TFSA is also subject to cancellation and/or a cap. So I'm less inclined to think of it as a "sure-thing" ... time will tell.




My Own Advisor said:


> ... Nobody has any idea what the future holds, so the RRSP is an unknown tax liability although one would hope the withdrawals from it will come at a much lower tax rate than contributions.


One should have a good idea of what one's retirement income might be yet many posting pro-"registered account of their choice" at best, seem to ignore that not everyone is in the same situation and at worst, seem to have tunnel vision on a factor or two without reviewing their situation.


Cheers


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## cainvest (May 1, 2013)

Eclectic12 said:


> I'm also not sure about being able a blanket classification of being able to pay the taxes later and use the extra $ now as a "problem".
> It's a variable that may or may not work out in one's favour.


All depends on what you're paying in taxes now vs what you expect to pay later. One could easily save 5%, 10% or higher values being in a lower tax bracket in the future, not to mention the compounding of that "free" money over time. No doubt TFSA is a great place to save money and currently has less restrictions, but an RRSP can be even better in some situations.


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## newfoundlander61 (Feb 6, 2011)

No, I only use a TFSA and being in receipt of a Defined Benefit Pension plan from my career in the army, don't really need an RRSP as well.


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## crazyjackcsa (Aug 8, 2010)

i dumped my severance payout into my RRSP. This coming year I'll be filling up my RRSP and catching up on previous years' space.


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## banjopete (Feb 4, 2014)

I'm with a few of what I can only assume are the younger folks here. I wish I had the dough to do it all but alas I must choose. TFSA's first for my lady and I, then spillover into the rrsps. We match what our employers will to not miss that free money but otherwise I usually can cover about half my year's room. 

This way I'm slowly losing ground to the limit which is fine by me but I think this year we'll both catch our TFSA's finally so next year could be a better year for catching the RRSP room if all goes well.


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