RRSP or TFSA. Where to put more $$

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Originally Posted by pheoxs

Are you only going to withdraw 45k per year max though? Anything 45k-95k would be taxed at 30.5%.

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Aim for that. If your house is paid off, $4K/month should be sufficient for a single person to retire on. And if you have a partner to share expenses but double the income, even better. Don't forget that at 65, OAS/CPP could add up to $1800 per month to your income as well.

My retirement budget:
Housing: $1K (taxes/utilities/insurance)
Transportation: $1K (lease/gas/insurance)
Food: $1K
Other crap contingencies (medial/travel/new toys/repairs): $1K

If you can't live on that, then pay more taxes or downsize your assets for more opex $ before reaching into RRSP.

Either way, you either pay now or pay later when you are forced to withdraw as RRIF at 71.

EDIT: https://simpletax.ca/calculator

Withdrawing $60K in AB has an average tax rate of 20%. That's still a saving of 16% if your income would otherwise be taxed at 36% in the $95-131 bracket.

Putting $ away when you make less than $95K make sense too, you just don't realize as much tax saving. But you will be doing it earlier in your career so you may enjoy more compound growth.

Also, there is also too much RRSP from a tax perspective.
https://globalnews.ca/news/5274486/t...oney-rrsp-die/

Question guys....

I just logged into my CRA account for the first time in a long, long time. There is a big message at the top which shows a numerical value for max RRSP deduction for 2019 tax year. ALSO, there is TFSA contribution room available for $12,896 for Jan. 1 2020. In early Jan., I contributed the maximum amount for the 2020 year. I have always contributed the maximum since inception. (2009) (My total deposits into the TFSA equal $69,500.)

So why are they telling me I can contribute more? Apparently I can contribute another $6896.99 on top of what I have already contributed this year.

Did you ever withdraw any money? Withdrawals increase contribution room fir the next year.

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Originally Posted by killramos

Did you ever withdraw any money? Withdrawals increase contribution room fir the next year.

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I have withdrawn gains before but always left my principal amount alone. I still don’t understand because they are saying I can contribute more cash than the maximum allowable. I must be missing something...

your contribution room for following years is full size of what you withdrew last year + new contribution room.
So you must've withdrawn $6896.99 of gains

i.e. if I grow my account to $100k this year, withdraw everything Dec 31/2020 come Jan 1/2021 I would have $106k of contribution room
(assuming I've only made deposits to max, no withdraws in previous years)

Conversely if my losses take me down to $10k I don't get any contribution room back, nor can I claim capital losses.

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Originally Posted by 16hypen3sp

I have withdrawn gains before but always left my principal amount alone. I still don’t understand because they are saying I can contribute more cash than the maximum allowable. I must be missing something...

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System doesn't track what you withdrew is gain or principle. If you withdrew, you get the room back next year.

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Originally Posted by 16hypen3sp

I have withdrawn gains before but always left my principal amount alone. I still don’t understand because they are saying I can contribute more cash than the maximum allowable. I must be missing something...

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Yes. If you have gains bro, that adds to your total amount allowed in the TFSA.

The total dollar value is the sum of each year and total gains within the TFSA

This I did not know! That’s totally awesome!!! Thanks for the replies.

Bumpity bump bump:

Work is no longer matching and adding GRRSP for the time being (i know, real hardship).

A) Do i pull my existing funds out?
B) Do i bother continue to put into GRRSP, or just contribute it into my own one post-paycheck? Obv less hassel to just keep it in work one

Depends if they are closing the plan or not. If you can leave it in and contribute as you are today it's probably fine.

If they are closing the group plan gtfo.

Just look at the funds in the GRRSP and decide if you like them. With some GRRSPs, the funds you can choose from are not great, or have high MERs. If this is the case, you're better off just putting them in your own. Conversely, if the funds in your GRRSP are good and have low MERs... (i.e. they are the funds you would choose if the GRRSP didn't exist), then keep going with GRRSP.

Also consider if the company matched funds have vested yet. Not sure how it works if they cease matching or close the plan. Something to look into

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Originally Posted by cjblair

Just look at the funds in the GRRSP and decide if you like them. With some GRRSPs, the funds you can choose from are not great, or have high MERs. If this is the case, you're better off just putting them in your own. Conversely, if the funds in your GRRSP are good and have low MERs... (i.e. they are the funds you would choose if the GRRSP didn't exist), then keep going with GRRSP.

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All of this.

I've never had access to any kind of GRRSP but aren't they generally filled with high MER product, similar to retail level mutual funds at the bank (or even worse)?

I maxed my TSFA last year and made a few yolo bets on 3 equities which have returned 12x combined. I will sell enough to cover and offset capital gains in my cash trading acct (which I expect to be significant in the next 1-3 years). When I see 100K+ and the capital gains exceeds the contribution room of my RRSP, thats when I will offload the offset in my TSFA and dump them in.

I have always been leary of being heavy in a vehicle that will see taxes at maturity.

Wow congrats. Seems like you have like 600k in TFSA? Crazy.

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Originally Posted by Disoblige

Wow congrats. Seems like you have like 600k in TFSA? Crazy.

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Ya I’d quit my job if I could make 500k/yr tax free :rofl:

Not yet. Well on my way. Notice how I said "when" basically everywhere in my post. I'm at ~286k.

I have done really well with PWM.V where almost all of my money in my TSFA has been the last year. Bought in at 12c, got out at 24c, got back in at 12c and now it is 28c. I expect this company to go the distance, but looking at their trends surrounding earnings pumps and commodities swells, I have a lot of time until they actually moon. Just riding their rollercoaster.

I am doing well on my options in my cash account. In order to preserve my cash I will sell off and widthdraw if I continue to do well. This is part of my above strategy. Options like anything are a straight gamble, so I may zero down, but I have been taking my tax out and letting it sit while gambling the balance.

Your post reads like you made your yolo bets with your max tfsa amount, and 12x that. In a year.

Regardless, 12x anything is a good return.

286k tax free. Well done!

Kinda on topic. If you had a public sector pension, would that change your RRSP vs TFSA preference? Would it push you harder towards TFSA?