NO you can't do that. "Cash" sheltered in an RRSP - i.e. an account balance that isn't invested in something - has to stay there. If it's coming out of the RRSP shelter in any way shape or form, it's a withdrawal for tax purposes.
RRSP question
- Thread starter LiNK666
- Start date
The RRSP is registered and you get the tax benefit of contributions at annual tax filing time.
TFSA is a "Tax free savings account" with a ceiling on how much you can put in it but no write off or annual tax filing saving.
If you cash out and withdrawal from the RRSP to a TFSA the CRA wants their tax benefit back (prior rebate) before you take advantage of TFSA (no tax) or you are technically double dipping.
Leave it in RRSP self directed or other....moving to TFSA is just like cashing it into a bank account and the hit will hurt at -30%
TFSA is a "Tax free savings account" with a ceiling on how much you can put in it but no write off or annual tax filing saving.
If you cash out and withdrawal from the RRSP to a TFSA the CRA wants their tax benefit back (prior rebate) before you take advantage of TFSA (no tax) or you are technically double dipping.
Leave it in RRSP self directed or other....moving to TFSA is just like cashing it into a bank account and the hit will hurt at -30%
GateKeeper
Well-known member
Hmmm
is this not sort of what I said in the beginning......but what the heck do I know, I ain't no financial advisor, I only use one.....
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As everyone said, it's a big no-no ... the reps would advise you against it anyways. So basically not to get dinged, you have to be under the same "Registered" account type, RSP -> RSP or eventually once they hit that age, RSP -> RIF
TFSAs are another story though where you don't have penalties for withdrawing from them to put into another program so in TFSA -> RSP scenario you'd be okay, just not the other way around.
Also for the TFSA, you'd want to see if they have any other TFSA setup in order to determine how much space they've got left. It's not a huge penalty if they go over their contribution room but there's still one.
Currently if you haven't put a penny in TFSA you have about $52k available that can be put in there tax free. I see TFSA more as a short-mid term solution (well, can be long term too), whereas RSP is for long-term.
There is an interesting long-term possibility for TFSA. Assuming the rules don't change (which they probably will), making high returns in a TFSA can be used to create tons of untaxed wealth. As this scenario becomes more common, I am sure a future government will change the rules and tax withdrawals above principal from a TFSA. Hopefully, there is some heads up before that happens so people can drain their accounts.
Green Meenie
Well-known member
Yup ^^^ This. East-Peasy RRSP; TFSA accounts, Canadian or US markets. Very attractive trading fees. All good.
....get a licensed financial advisor to sit down, look at everything, and offer advice based on your desires.
That's my advice.
I've see a few DIY disasters in the past where good intentions went wrong resulting in either losses, stagnation, or huge tax implications that weren't seen before it was too late.
I have a great guy with London Life, PM me if you want his number.
That's my advice.
I've see a few DIY disasters in the past where good intentions went wrong resulting in either losses, stagnation, or huge tax implications that weren't seen before it was too late.
I have a great guy with London Life, PM me if you want his number.
I'm not saying this is bad advise as it is based on personal experience but I have had the opposite experience personally (and know of others that mirror my experience). I think much comes down to the individual adviser and their employer. Both have to be very atypical for you to have a chance.
A friend retired early (with a decent chunk of cash) and split his money three ways. The adviser at the bank got 1/3, a high priced adviser got 1/3 and he managed 1/3 himself. He let the trial continue for 3 years. He crushed the return of both of the advisers (even before their fees and service charges were factored in). He brought all of his money in house and is still doing well 10+ years later.
Buffett just won his 10 year bet where an index fund beat an obscenely priced hedge fund manager quite handily. From Bloomberg "the S&P 500 was up 85 percent, versus 22 percent for the funds. ... estimated fees accounted for 60 percent of the pre-fee return, suggesting that the funds returned about 55 percent before fees."
I'm not necessarily suggesting that the funds needs to be managed by the advisor, I'm suggesting that the advisor can.... just advise.
Yes, there will probably be a fee involved for the advisors time in lie of actually managing the money after the fact (if that's the way one wants to go), but just having someone with a been-there-done-that lifetime of experience to listen to ones ideas and then advise if they are wise (as well as the tax implications, most importantly) could be a wise course of action.
One mistake transferring funds around without fully understanding the tax implications for example could suddenly result in tens of thousands of dollars in losses to taxes.
Yes, there will probably be a fee involved for the advisors time in lie of actually managing the money after the fact (if that's the way one wants to go), but just having someone with a been-there-done-that lifetime of experience to listen to ones ideas and then advise if they are wise (as well as the tax implications, most importantly) could be a wise course of action.
One mistake transferring funds around without fully understanding the tax implications for example could suddenly result in tens of thousands of dollars in losses to taxes.
As for how to invest aggressively vs conservatively, the comes down to a risk assessment. Are the parents doing to be still financially secure if their nest egg loses 30% of it's value, then there's an argument to be made for playing the market and taking a lot of risk to maximize potential returns.
If they're going to be eating cat food in 10 years if they lose 30% of it's value, then conservative would be a wiser path.
Again, an advisor is the one to talk to about this as they can understand and crunch the numbers.
If they're going to be eating cat food in 10 years if they lose 30% of it's value, then conservative would be a wiser path.
Again, an advisor is the one to talk to about this as they can understand and crunch the numbers.
If I was any good at day trading and above average money management, I wouldn't need my actual day job. IMO, lots of 'couch traders' are like gamblers and you really only hear about the wins.
I use at guy at Edward Jones, I like him and we think alot alike. All his remote office computers are connected to a server in the 'home office' and he cant do ANYTHING that looks sketchy because they monitor trades and investments and have a formula.
I also use RBC securities, the returns they produce outperform Edward Jones every month, but I like some diversity.
I do some hobby trading because its interesting but if I really had a clue I'd be stinky rich by now, I'm pretty happy, but most of my money showed up the old fashioned way of going to work.
Short story, I'd go see a financial advisor, or two. I gladly pay the fees, they make money, I make money. With a mirror, some scotch and a dremel I could do my own dental work as well, but I dont think I will.
I use at guy at Edward Jones, I like him and we think alot alike. All his remote office computers are connected to a server in the 'home office' and he cant do ANYTHING that looks sketchy because they monitor trades and investments and have a formula.
I also use RBC securities, the returns they produce outperform Edward Jones every month, but I like some diversity.
I do some hobby trading because its interesting but if I really had a clue I'd be stinky rich by now, I'm pretty happy, but most of my money showed up the old fashioned way of going to work.
Short story, I'd go see a financial advisor, or two. I gladly pay the fees, they make money, I make money. With a mirror, some scotch and a dremel I could do my own dental work as well, but I dont think I will.
The advocis website has a list of all fully certified CFPs. That would be a good place to start for knowledgeable advisors. As well, look for a fee based advisor to offer you guidance vs a no-fee fund based advisor, who's more motivated to sell products.
