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RRSP’s, RRIF’s & TFSA’s

The holidays are approaching and 2016 will quickly be in the past. You still have time to do this year-end checklist for retirement plans; RRSPs (Registered Retirement Savings Plans), RRIFs (Registered Retirement Income Plans) and TFSAs (Tax Free Savings Accounts).

1) If you are planning a withdrawal from your TFSA in early 2017, do it now – you will be able to recontribute the amount anytime next year, instead of waiting until 2018 if you withdraw in 2017.


2) If you are 65 or older and do not have a pension to be able to claim the $2000 pension credit on your tax return, consider converting enough of your RRSPs to a RRIF to pay out the 2K. An alternative would be to purchase an annuity with RRSP assets that will pay out 2K annually.


3) If you have had a reduced income or little income this year, you can withdraw funds from your RRSP or your RRIF prior to year-end, and pay less tax than you would have if your income was as usual.


4) If you turned 71 in 2016, you must close your RRSP by year end – you can convert to a RRIF, purchase an annuity, or cash it out. If you still have earned income for 2016 and turned age 71 in 2016, you could still contribute to your RRSP prior to year-end (and closing your RRSP). If you have maxed out your RRSPs, you will have to pay an over contribution penalty for one month, but the tax deduction on your 2016 tax return should save you more dollars than the penalty.


5) Even with the pension splitting rules, don’t underestimate the value of a spousal RRSP. Contribute prior to year-end and your spouse could withdraw those funds as early as January 1, 2019 without the withdrawal being taxed in your hands – if you are planning a spousal contribution prior to the 2016 cut-off of March 1, 2017, do it now and your spouse can withdraw a year earlier. Talk to an advisor today for your situation.             

I’d like to wish you a happy holiday season and a New Year full of opportunities and happiness!

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