Can you transfer a RRIF to a TFSA—and what are the tax implications? + MORE May 28th

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The best RRSPs in Canada for 2024

– moneysense.ca

RRSPs

The best RRSPs in Canada
We’ve rounded up the best RRSP rates on savings accounts and GICs, as well as the best RRSP investment accounts.

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By Rebecca Cuneo Keenan and Keph Senett on May 23, 2024Estimated reading time: 19 minutes

Why should you open a registered retirement savings plan (RRSP)? This account type is often described as “tax-advantaged,” meaning it offers a tax-efficient way for savers and investors to build wealth for the future, usually for retirement. To maximize its potential, it helps to know the differences between an RRSP and other kinds of registered accounts, like the tax-free savings account (TFSA) and first home savings account (FHSA). Plus, not all RRSPs are built the same—you’ll want to compare the saving and/or investing options they offer, as well as their interest rates and fees…

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Can you transfer a RRIF to a TFSA—and what are the tax implications?

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Ask MoneySense
What is the implication of transferring money from my RRIF to TFSA on my income and taxes? Do I need to allow for a 30% deduction when I withdraw and it becomes income to be taxed at the end of the year? Or it doesn’t affect my income?

—Soheir

Transfers between registered accounts

You can make direct transfers between some registered accounts, Soheir, and in some cases, it is advisable to do so. For example, when you convert your registered retirement savings plan (RRSP) to a registered retirement income fund (RRIF), this is done directly and on a tax-deferred basis. When you transfer money from a tax-free savings account (TFSA) at one institution to a TFSA at another institution, a direct transfer ensures it is not considered a withdrawal and avoids the risk of overcontributing.

Can you transfer a RRIF to a TFSA?

A RRIF is a tax-deferred account. A TFSA is a tax-free account. So, you cannot do a direct transfer between the two.

You can take a RRIF withdrawal and deposit the after-tax proceeds to your TFSA, Soheir…

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