You can transfer from mutual fund to another mutual fund without penalty as long as the transfer is after 90 days (I think it's 90 days).Let's say you have 10k in a RRSP or TFSA. The money is in a certain mutual fund, but now you want to switch the funds to a different mutual account. Is this possible?
Am I allowed to freely transfer funds within my RRSP accounts or TFSA accounts? Is their some kind of penalty?
So out of an RRSP and into a REGULAR TFSA, the RRSP withdrawal is regarded as an income add back?You can transfer from mutual fund to another mutual fund without penalty as long as the transfer is after 90 days (I think it's 90 days).
If you transfer out of rrsp into a regular tfsa then you will get hit by the government. But you can transfer from rrsp mutual fund into tfsa mutual fund that it itself is within an RRSP, without penalty, again as long as you haven't moved the investment in the last 90 days.
A tfsa can be outside an rrsp or in one.
Thanks, cdnsimon!You can transfer from mutual fund to another mutual fund without penalty as long as the transfer is after 90 days (I think it's 90 days).
If you transfer out of rrsp into a regular tfsa then you will get hit by the government. But you can transfer from rrsp mutual fund into tfsa mutual fund that it itself is within an RRSP, without penalty, again as long as you haven't moved the investment in the last 90 days.
A tfsa can be outside an rrsp or in one.
1. RRSP => TFSA goes to you first as taxable income (ie taxed in your next year's return). You can't switch from RRSP to TFSA without incurring withholding taxes (20% at that amount). Anything out of an RRSP to your pocket, or that is no longer registered, is taxable.Let's say you have 10k in a RRSP or TFSA. The money is in a certain mutual fund, but now you want to switch the funds to a different mutual account. Is this possible?
Am I allowed to freely transfer funds within my RRSP accounts or TFSA accounts? Is their some kind of penalty?
1. RRSP => TFSA goes to you first as taxable income (ie taxed in your next year's return). You can't switch from RRSP to TFSA without incurring withholding taxes (20% at that amount). Anything out of an RRSP to your pocket, or that is no longer registered, is taxable.
2. TFSA => RRSP gives you a tax deduction in the following year. No consequences moving from a TFSA. Both accumulate tax free. No penalty moving out of the TFSA.
3. TFSA => TFSA or RRSP=> RRSP then you can do so without penalty, as long as the funds are in the same type of registered account (ie, TFSA or RRSP). You can also switch between different RRSP's or TFSA's at different institutions, but the institutions do all the transfers. Money shouldn't pass through your hands.
A TFSA can't be in an RRSP, and vice versa. They are 2 separate vehicles, subject to different tax consequences. Finally, don't forget potential fees if the accounts are with a brokerage
Out of an RRSP into regular tfsa the government will ding you because you already got a tax break for putting income into a non-taxable bracket. If you recall, when you contribute to an rrsp you don't pay tax on that money. The rules for withdrawal are the same as they were prior to tfsa implementation: any withdrawals out of rrsp when you're not retired will be taxed.So out of an RRSP and into a REGULAR TFSA, the RRSP withdrawal is regarded as an income add back?
any withdrawals out of rrsp (or later rrif) will be taxed, retired or not.The rules for withdrawal are the same as they were prior to tfsa implementation: any withdrawals out of rrsp when you're not retired will be taxed.
This is correct. Pardon my error in my original post and any confusion it may have caused. I got my wires crossed when speaking about mutual funds, tfsa, and rrsp.A TFSA can't be in an RRSP, and vice versa. They are 2 separate vehicles, subject to different tax consequences. Finally, don't forget potential fees if the accounts are with a brokerage
Let's say you have 10k in a RRSP or TFSA. The money is in a certain mutual fund, but now you want to switch the funds to a different mutual account. Is this possible?
Am I allowed to freely transfer funds within my RRSP accounts or TFSA accounts? Is their some kind of penalty?
Worf confirmed my statement but thank you (your post #2 was a little unclear).Out of an RRSP into regular tfsa the government will ding you because you already got a tax break for putting income into a non-taxable bracket. If you recall, when you contribute to an rrsp you don't pay tax on that money. The rules for withdrawal are the same as they were prior to tfsa implementation: any withdrawals out of rrsp when you're not retired will be taxed.
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/wthdrwls/menu-eng.html
Ya. I think you meant to say the 'same mutual fund' whether it is held in an RRSP or TFSA.This is correct. Pardon my error in my original post and any confusion it may have caused. I got my wires crossed when speaking about mutual funds, tfsa, and rrsp.
I had meant to say that a mutual fund can be in an rrsp and tfsa.
http://www.cdic.ca/Calculate/RRSP/Pages/default.aspxHere is a question where I got conflicting answers.
Question: Does a TFSA have its own CDIC $100,000 coverage or does it share the $100,000 with your RRSP and/or non-registered accounts. Example, say you have a $120,000 GIC in the TFSA and a $150,000 GIC in an RRSP, do you get a total CDIC coverage of $200,000?
Correct.any withdrawals out of rrsp (or later rrif) will be taxed, retired or not.
Correct. I made the assumption the OP was not retired.any withdrawals out of rrsp (or later rrif) will be taxed, retired or not.
If you don't know about the withdrawal consequences I would get a different financial advisor, even if you bought directly from the bank as this should have been explained to you and you possibly even signed a one-pager describing the fees. I have seen some instances where a person working at the bank was dinged capital gains when moving from one account to another within the same bank - deemed to have been a sale not a transfer.
RRSPs are a tax deferred product - you pay tax when you withdraw the money - the idea being the withdrawal is when you are in a lower tax bracket.
If you are charged a Fee, then get a statement as you can claim that as a 'carrying charge' on your tax return. Withdrawals from an RRSP will typically be taxed at around 30 % which may or not result in some money being returned as part of a tax refund, depending on your total income and other deductions etc.
Speak with someone in person where you hold the funds and they will be obligated to explain it to you - if at the bank, ask if they are a certified financial planner/licensed as they really should be in order to give you the correct details.
Perhaps my understanding of it isn't comprehensive, and I do see a problem with my description of it being income into non-taxable bracket, as you pointed out. I've put tens of thousands of dollars from my income into rrsp's and have not used it against my taxable income. For me it doesn't reduce my income affecting taxes I pay, it's carried forward and builds up year after year. It makes the most sense at this point because the greatest gains for income reduction for rrsp contributions are in the higher income brackets.Worf confirmed my statement but thank you (your post #2 was a little unclear).
When you buy an RRSP, you're not "putting income into a non-taxable bracket" (it isn't a notional transfer - you actually reduce your income when you contribute or pay into an RRSP).
In other words, no double dipping allowed.Any fees related to an RSP or TFSA cannot be deducted as carrying charges on your taxes, since one is tax deferred and the other tax-exempt.
Advisors will sometimes recommend that you pay your annual fee based RSP fees from your non-RSP account so you can deduct them, but if CRA gets wind of it during an audit you will be reassessed.
Sadly many of the bank financial planners in the typical bank branch don't know these rules as well as you would expect. And that is why you hear stories about people getting "dinged". Try to get as much advice in writing even email as possible! They are knowledgeable about general/basic tax principles, but once you get into administrative issues or any slight degree of complexity they can get confused although they mean well.
