What types of tax-free savings accounts (TFSAs) exist? + MORE Jun 19th

A tax-free savings account (TFSA) is a fantastic way to earn money on your savings, without having to pay tax on those earnings. Registered by the federal government, TFSAs are available to Canadians aged 18 and older. Unlike a registered retirement savings plan (RRSP), you cannot deduct contributions to your TFSA from your income tax, so you will have to pay income tax on that initial money. But as long as you adhere to TFSA guidelines, you won’t pay taxes on any earnings made within the TFSA, not even when you withdraw it. Plus, you can withdraw as much as you want at any time.

There’s a specified limit to how much money you can put inside a TFSA. For 2023, the annual TFSA contribution limit is $6,500, and there is a lifetime maximum of $88,000 for those who were 18 or older as of 2009. The good part is that any unused contribution space and any amount that you withdraw from your TFSA becomes available to you as contribution room in the next calendar year.

Even though the word ‘‘savings” is in the name, it’s actually better to think of TFSAs as investment accounts, rather than simply a savings account…

To buy a house in the next five years, writes financial expert Jason Heath, Lauren should direct-transfer some of her maxed-out RRSP cash into the new tax-sheltered First Home Savings Account.

To buy a house in the next five years, writes financial expert Jason Heath, Lauren should direct-transfer some of her maxed-out RRSP cash into the new tax-sheltered First Home Savings Account.

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My question is in regards to a spousal RRSP that I have set up for my wife years ago. When she turns 71, do we have to turn it into something like a RRIF, which I did for my RRSP (I am older than her) and then withdraw from it annually? Or, could it be directly transferred to her TFSA?—John

Withdrawing from a spousal RRSP

A spousal registered retirement savings plan (RRSP) can be an effective retirement and tax planning tool. Like a personal RRSP, it allows you to defer income tax to a future year. But unlike a personal RRSP, the contributor to the plan and the annuitant—the owner—are different parties.

Your wife’s spousal RRSP is hers. While you received the income deductions for making contributions to the plan, she owns it and will generally be required to claim the spousal RRSP withdrawals as income.

What to do with a spousal RRSP at age 71

By the end of the year you turn 71, an RRSP annuitant is no longer allowed to own RRSPs—personal or otherwise, including spousal…