TFSA and RRSP

[Vmack]

Originally posted by Xtrema


I got nothing to add here. You need to talk to your peers and instructors. But if you are in standard post secondary school programs, it shouldn't affect you. Just a new certification path and title once they have ratified everything.

I think it's a bigger deal for current CGAs and CMAs.

thats what I gathered in reading through the website. Shouldn't effect me, at least I hope it wont

[CapnCrunch]

Originally posted by tenth

How does this analysis factor in that TFSA contributions are on present day after tax income? Looks like you're just applying the roughly top AB tax rate to $100k, but that would be wrong.


There's no benefit to 2 Canadian accounting designations, but regardless if you're 2 years out we'll all be CPA's by the time you qualify.

I'm just generalizing here. My point is it doesn't make a lot of sense to pay into an rrsp when your in a low tax bracket, and then take it out later when you retire if you are saving to be in a higher tax bracket.

Like it's been mentioned, there are so many other variables to consider.

But in my opinion, someone fresh out school, making a low-ish salary, and not saving more than $5000 a year should use a TFSA. Once your income increases (higher tax bracket), switch to RRSP's.

[Xtrema]

Originally posted by msommers
Assuming housing prices don't plummet over my lifetime...

Lets assume I have 25K into my RRSP for a first-time home buyer. I've bought a home. Now I'm paying interest on that mortgage. Unless I'm getting RRSP matching and/or being lowered a tax bracket, would it make more sense to put future RRSP money against the mortgage to pay it off faster?

Invest in RRSP and put the tax refund against mortgage? Why pay taxes when government can help you pay down the mortgage?

This really depends on your view on real estate trend. If you expect RE to adjust down, putting more $ against principle is almost like throwing money away when you have better investment options.

But if like me that really hates debt, take care of the mortgage first. Investment may win or lose, mortgage is a guarantee lost to the bank.

[tenth]

Originally posted by CapnCrunch


I'm just generalizing here. My point is it doesn't make a lot of sense to pay into an rrsp when your in a low tax bracket, and then take it out later when you retire if you are saving to be in a higher tax bracket.

Like it's been mentioned, there are so many other variables to consider.

But in my opinion, someone fresh out school, making a low-ish salary, and not saving more than $5000 a year should use a TFSA. Once your income increases (higher tax bracket), switch to RRSP's.

Most folks right out of school will be in the 32% bracket (>$44k income), or will be within a year or 2. Unless you have huge taxable investments earning healthy regular returns at retirement putting you in a top tax bracket, odds are when you pull it out it'll be at a lower than 32% average rate just by virtue of the bracket taxation system.

[Xtrema]

Unless you are super rich, or has tons of pensions payment, there is no way your RRSP withdrawal will be taxed at top bracket.

[CapnCrunch]

Originally posted by tenth

Most folks right out of school will be in the 32% bracket (>$44k income), or will be within a year or 2. Unless you have huge taxable investments earning healthy regular returns at retirement putting you in a top tax bracket, odds are when you pull it out it'll be at a lower than 32% average rate just by virtue of the bracket taxation system.

I think you didn't read this part.

"if you are saving to be in a higher tax bracket."