Think about a TFSA as part of your strat­egy

The Hamilton Spectator - - LOCAL - Ejaz Nadeem, MA, CFP, CLU Vice Pres­i­dent Wealth Man­age­ment

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.FirstOn­tar­i­oIn­vest­ 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.

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