Should you withdraw from non-registered or TFSA investments in retirement? Mar 8th

Not sure how to make a retirement plan? Read on…
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Ask MoneySense
I have stocks in my TFSA as well as some that are non-registered. I am at the point in my life (retired) now that I’d like to begin selling them and using the money. Do I sell from the TFSA account or just from the non-registered portfolio?—Catherine

TFSA versus non-registered withdrawals in retirement

Great question, Catherine. And like many of my answers, I would say it depends. First, a primer on how stocks are taxed.

How dividends are taxed

In a non-registered account, dividends are taxable each year, whether you withdraw them from the account or not. This includes reinvested dividends in a dividend reinvestment plan (DRIP).

The way dividends from Canadian stocks are taxed is a bit weird. If your income is low, they can actually save you tax. For an Ontario taxpayer with under $49,000 of income in 2023, for example, the tax rate is about minus 7%, after accounting for the Ontario dividend tax credit. So, for every dollar of Canadian eligible dividends, you can save around 7 cents of tax that would otherwise be payable…

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