Generally not a good idea. Problem is you have to pay tax now which means you lose some of that tax sheltered money - how much depends on your marginal rate.
Better to leave the money in the RRSP tax-sheltered and make new contributions to the TFSA.
There are lots of ETFs and mutual funds that offer good cash flow. I like Fidelity Monthly Income. But what about stocks that pay high dividends - New Flyer, Enerplus, etc. Yes, higher risk but good cash flow and some upside.
For a little less risk - BCE pays over 5%.
What a great idea - get the fund out of the RRSP, where the money will be taxable when withdrawn, and into a TFSA where it won't be. Unfortunately, Finance is a step ahead of you. Such transfers are illegal.
There are lots in my Income Investor and Internet Wealth Builder newsletters. Special favorites are Enbridge, BCE, CN Rail, Telus, Rogers, Fortis.
No not at all. The stock market is very volatile and some people just can't handle that. With two crashes already in this century, it is understandable. But stocks do perform better in the long run so if you choose carefully and can take the risk, that's the best option.
Yes it is allowed and you're right - most financial institutions don't allow it. If anyone knows any that do, please let us know. The process is somewhat complex - check my book Tax-Free Savings Accounts for details.
The main downside is that the exemption from the 15% withholding tax on dividends does not apply in a TFSA. So you'll be nicked 15% on payments and there is no recourse - you can't claim an offsetting foreign tax credit because it is a registered plan.
That exemption is for U.S. dividends by the way. Foreign dividends are governed by different rules but the same general comments re a TFSA apply.
You have to be a Canadian resident to have contribution room. So for someone who becomes a resident this year, for example, only the 2013 contribution limit applies.
To Asha - it depends how long you have been a resident of Canada. You are allowed to carry forward $5,000 for each year starting in 2009 that you were a resident and 18 or older. So the maximum this year would be $25,500 if you qualify on all counts.
The 2013 limit is $5,500 - hence the total of $25,500
Gordon, here's a follow-up to the question about living outside of the country...
If you retained Canadian residency status during those years they would count. Otherwise no. The rules on residency can be a little tricky so you may need professional advice from a lawyer.
Gordon, you must have a lot of good tips about TFSA investing. Can you share a few?
In the book I include several sample portfolios. Where you invest really depends on your goals. Some people today are saving for a home, some want to maximize tax-free earnings, etc.
I think the plans are most effective when used to shelter the maximum amount of money from tax. So my preference would be stocks, including several that I have mentioned.
US stocks are worth considering even despite the 15% withholding tax on dividends. Look at it this way - that's the only tax you will ever pay on those dividends.
There is no limit. That's one of the beauties of the TFSA. You can make a $50,000 profit, withdraw it all, and that will be added to your contribution limit the next year. Sweet!
Rules on Lira withdrawals are different in each province and if the plan is under federal jurisdiction they have their own rules. You'll have to check which rules apply. But the money will be taxed when it comes out.
Trying to predict what future governments will do is a fool's game. They changed the rules on income trusts, for example, after promising they wouldn't.
That said, it would be a hugely unpopular move to change the basic TFSA rules. Hard to imagine a party risking it
To Keith - I am not sure what your point is. If you mean RRIF or LIF withdrawals (not LIRA), you have to decide if it is cheaper to withdraw the money at your current tax rate or at the rate that will apply after 71. Complex calculation.
Gordon, before we wrap up, is there anything you'd like to add?
Just to thank everyone who took part.
Gordon, thanks again for taking the time to chat with us today. And thanks to our readers for their great questions!