5 reasons to love your TFSA
Canadians love Tax-Free Savings Accounts (TFSAs). And no wonder — with tax-free earnings and tax-free withdrawals, what’s not to like? But retirees have even more reasons to appreciate these flexible investment accounts. Here’s why.
- No upper age limit for contributions.
Unlike a Registered Retirement Savings Plan (RRSP), where you can’t contribute after the end of the year you turn 71, you can con-tribute to your TFSA for as long as you like.
- No mandatory withdrawals.
With a Registered Retirement Income Fund (RRIF), you have to take out a certain percentage of your money every year. Not so with a TFSA. Your account can grow intact until you decide to make a withdrawal.
- No taxes.
Not only are the earnings within your TFSA tax-free, so are withdrawals. So when you take money out, there’s no penalty, no withholding tax, and no nasty surprises when filing your tax return.
- No impact on government benefits.
Withdrawals from your TFSA won’t affect your eligibility for income-tested benefits (such as Old Age Security and the GST Tax Credit).
- A great place to deposit RRIF/annuity income.
If the income from your annuities or RRIF is more than you need to live on, you can contribute the excess (up to your limit for the year) in your TFSA, where it can grow tax-free.