Think about a TFSA as part of your strategy

Tax-Free Savings Accounts (TFSAs) were introduced in 2009 as another way for people to save and invest money tax-free. They seem to be much more popular than RRSPs these days and there are a few reasons why. Most people want to minimize their taxes and a TFSA is a great way to invest money that grows tax-free. And- they’re pretty straight-forward. The contribution limit for 2017 is $5,500, anyone 18 and over can contribute and unused contribution room can be carried over. If you were 18 in 2009 when the program started and you haven’t contributed yet, you can put a maximum lump-sum of $52,000 in your TFSA in 2017. Both RRSPs and TFSAs offer tax-sheltered growth, but there are differences. Unlike RRSPs, TFSA contributions are not dependent on your earned income so you won’t get a tax-deduction. Your withdrawals from an RRSP are fully taxable and funds cannot be put back once they are taken out (except in the case of the Home Buyers Plan). TFSAs are more flexible. You can withdraw your money anytime without any tax consequences and the funds can be put back into the TFSA to restore the contributions (but only in a future year). If the withdrawn money is put back in the current year, it may be considered over-contributing and could be assessed at a penalty of one per cent per month until the excess contribution is withdrawn. While this route is generally a good way to invest for everyone, TFSAs are very beneficial to older Canadians. They allow retirees to continue to shelter money when they no longer qualify to contribute to an RRSP. If a retiree is required to take out more from their RRIF (Registered Retirement Income Fund) than they need, the excess could be invested into a TFSA and can continue to grow tax-free. Several strategies exist to maximize tax savings, reduce taxable income and preserve retirement benefits like Old Age Security and other income-tested government programs, by utilizing an efficient combination of TFSAs, RRIFs and pension benefits. Talk to a financial advisor before you make any decisions. At FirstOntario Credit Union, our advisors specialize in investment and retirement planning and can help you design a plan to maximize your benefits and minimize taxes payable in retirement. Connect with one of our advisors today and make the most of your savings. Visit www.FirstOntarioInvestments.com for more information. *Mutual Funds are offered through Credential Asset Management Inc. and Mutual funds, other securities and financial planning are offered through Credential Securities Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Unless otherwise stated, mutual funds, other securities and cash balances are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer that insures deposits in credit unions. Mutual funds and other securities are not guaranteed, their values change frequently and past performance may not be repeated. Credential Securities Inc. is a Member of the Canadian Investor Protection Fund.